Simon Read: It's been a year to forget for banks, but we shouldn't forget – or forgive

 

Claims chasing companies are confident they've found a new mis-selling scandal to bash the banks with. This time it's expensive packaged accounts that include often dubious insurances.

Last week the Financial Services Authority published new guidelines designed to clean up poor sales practices of the accounts.

The new rules mean that next year, more than 10 million people with paid-for current accounts will be sent a letter informing them whether or not they can actually use the benefits included.

This week Lloyds TSB and Bank of Scotland – the banking group which has most of the expensive current accounts – said it will suspend telephone and branch sales of packaged bank accounts next year.

Are the claims chasers right? If so, it will be just another black mark against the high street banks in 2012, in what has proved to be their worst year yet, in terms of reputation and treating customers unfairly.

The ethical website Blue & Green Tomorrow has – in conjunction with the campaigning group Move Your Money – rounded up just why the big banks have been bad this year.

It's a useful reminder, and should send a stark warning down Britain's banking halls that they must do better in 2013, or risk losing all of us as customers.

For instance, the site reports that it's been a bad year to be a Barclays' customer. Not only was the bank at the centre of the Libor rate-rigging scandal, for which it was fined £276m, but it also experienced a shareholder revolt at its AGM in April over boardroom pay, where 26.9 per cent rejected Barclays' executive remuneration package.

HSBC's poor 2012 centred on accusations of money-laundering. After an investigation by the US Senate, the bank was forced to pay £1.2bn in penalties for channelling money for Mexican drug barons and Iranian criminals – at the time the largest fine ever given to a bank.

Meanwhile Lloyds Banking Group, which owns Lloyds TSB, Halifax and the Bank of Scotland, revealed a half-year loss of £439m in July after being forced to increase the amount it had set aside to compensate customers mis-sold payment protection insurance by £700m to £4.27bn overall.

Royal Bank of Scotland is set to be slapped with the biggest Libor fine of all the UK high-street banks to date at £350m. It also received continued criticism during 2012 for its funding of energy-intensive Canadian tar sands operations. That's on top of a £1.5bn half-year loss and a PPI compensation pot so far totalling £1.7bn.

And what about NatWest? The bank's annus horribilis is dominated by its shocking IT meltdown over the summer, when up to 12 million people were unable to pay bills or withdraw money. The City watchdog later ruled that the bank had to refund and compensate affected customers.

Move Your Money claims that in 2012 more than half a million people in the UK have made the switch from high street banks to dedicated ethical alternatives.

Will that race for change accelerate next year? It really wouldn't surprise me. So what are the alternatives that people are choosing? We've written about most of them this year, but here's a reminder, courtesy of Blue & Green again.

There's Triodos Bank, which last year reported a 36 per cent growth in green lending and saw a 51 per cent increase in new account applications at the height of the Barclays scandal which saw so-called casino banker Bob Diamond lose his job.

Then there's Charity Bank, which uses your cash to lend to good causes. Since being launched a decade ago, it has issued 1,006 loans, worth £165m. Its loans are estimated to have improved the lives of some 3.5 million people across the UK.

Co-operative Bank, the closest thing to a high street bank that the alternative banking sector has, was named European sustainable bank of the year. It is set to take on an extra 4.8 million customers when it completes the takeover of 600 branches from Lloyds next year.

And then there's the Ecology Building Society, Reliance Bank – which was formerly the Salvation Army's bank – and Unity Trust Bank.

In short, you don't have to take the same old bad service and excuses from the traditional banks. If you're already thinking about possible new year's resolutions, switching to a more sustainable bank may not be a bad one to adopt.

s.read@independent.co.uk

Twitter: @simonnread

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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