Simon Read: If firms can't put things right fast, leave them as quick as you can
The mobile phone company 02 was in the firing line this week after it left millions of its customers without any service for more than a day. The mess-up followed the similar computer glitch at NatWest, RBS and Ulster Bank last month which left their customers without proper banking facilities.
But the way the telecoms company coped with the fall-out should serve as a salutory lesson for banks. While it took until this week – around a month after the computer cock-up – for RBS to agree a compensation package for those affected, 02 reacted almost immediately.
Yesterday, a day after the problems had been resolved, the phone firm said: "We want to restore confidence and trust, so for those customers affected by the lack of service, we will be doing everything we can to make it up to them."
That's the kind of statement you believe. The company is clearly worried about customers defecting to the rival networks of Vodafone, Three, Orange and T-Mobile, and is prepared to do something about it. If I were an 02 customer, I'd wait and see before switching networks.
Compare that to customers of the RBS banks who had to wait weeks for bank boss Stephen Hester to outline what it is prepared to do to put things right. He said it will pay for affected individuals to receive a free credit report to check if they have suffered any default notices and that no one will pay bank charges caused by the processing failure.
On top of that, he said, customers will be reimbursed for fees they may have incurred, if, for example, their mortgage payments bounced. "As well as automatically refunding unfair fees or charges, we will credit any interest they were wrongly charged or should have earned," he said.
Mr Hester said that anyone who incurred extra costs – whether or not they are customers of the bank – will be reimbursed. But noticeable in his late set of promises was the absence of the word compensation. RBS clearly feels it does not need to compensate people for the distress and financial problems it caused, only to cover their costs.
Interestingly the Co-operative Bank said yesterday that the number of people switching to the ethical bank has soared 61 per cent in the last three weeks. Meanwhile the Nationwide building society reported a 67 per cent increase in switching to the mutual since before the RBS fiasco.
People haven't just been moving away from NatWest and RBS, of course. There have also been plenty of fed-up Barclays customers looking for an alternative after being sickened by the Libor scandal which cost former chief Bob Diamond his job. In fact the Co-op said it had two and a half times more switchers from Barclays alone.
Rumours that the Co-op will be successful in its bid for more than 600 branches being sold by Lloyds Banking Group also strengthen its credentials as a solid alternative to the traditional high street names. The Co-op would end up with 10 per cent of the UK's bank branches and 7 per cent of the current account market.
The latter figure is crucial as at the heart of banking is the current account. We need a bank account that is reliable and that we can trust. So I was pleased to see that the Office of Fair Trading yesterday launched a new inquiry into the current account market.
It last looked into current accounts in 2008, but has there been much improvement since then? Not really, in my view. Accounts still come with massive charges and it's almost impossible to compare different deals to work out which is best because of the different way banks calculate fees.
The OFT promises to report back by the end of the year. Let's hope it can force banks to start working for customers, rather than simply profiting from them.
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