Money: Bankers like us to be lazy
Sunday 05 September 1999
The seven banks and one building society featured in the report spend a staggering pounds 90m on mailshots every year. This is how they do most of their "cross- selling": flogging insurance, investments and mortgages to customers who probably start with a current account at the bank.
The report showed how two sample households could spend pounds 1,000 more than the "'best buy" rates if they bought a mortgage plus all their insurance, credit cards and personal loans from the bank. Barclays and NatWest came off worst. Barclays' personal loans were described as a "rip-off", with a pounds 5,000 loan over three years costing pounds 920 more than the "best buy" deal from Direct Line. About half of this is taken up by charges on loan insurance, which banks are keen to sell you as it makes them lots of extra money.
The Nationwide did best in the survey. As Which? pointed out, it is a building society and can operate on lower profit margins than a bank with demanding shareholders to satisfy.
Which? described buying this overpriced stuff as "misguided loyalty" on our part. But that's doing us a big favour. Most of us buy from a bank because we are too apathetic to look elsewhere for a mortgage or whatever else we need to sort out home finances in a hurry.
We in the UK haven't developed that peculiarly American passion for shopping around (preferably on the internet) for the best deals. We have been sitting around paying over the odds for pretty much everything for years, but when it comes to financial services there is something we can do about it. Be aware. Have a look at the best savings rates in the papers each weekend. Check websites such as The Exchange (www.exchange.co.uk) and Moneyworld (www.moneyworld.co.uk) to keep up with the latest changes.
The banks know their deals aren't brilliant. The concept of bancassurance (a bank selling its own investments and insurance to captive customers) has not been the success they were hoping for. Why else do you think they are trawling round for decent brand names? No wonder NatWest has swooped on Legal & General: the insurer has captured a big slice of the low-cost insurance and investment market. If NatWest can get L&G products in its branches, it will have a lure for new as well as existing customers. Friends Provident and Equitable Life, two other prestige insurance names, are the subject of persistent takeover rumours.
Meanwhile, life insurance and pensions from Scottish Widows will join Cheltenham & Gloucester mortgages on sale inside Lloyds TSB branches. C&G mortgages came out quite well in the Which? survey. Let's hope replacing rip-off bancassurers with in-store big names will offer better deals for (lazy) customers.
- 1 Man on naked bike ride gets ejected after becoming aroused
- 2 Fifa corruption: Europe plots to stage an 'alternative World Cup' in place of Russia 2018
- 3 How much sex should I be having?
- 4 Jaden Smith wears gender fluid dress to high school prom with Hunger Games actress
- 5 Betting company 'refuse to pay' after student wins £1,000 from 50p bet on Roger Federer
Caitlyn Jenner, formerly Bruce Jenner, reveals new look on Annie Leibovitz shot Vanity Fair cover
Russian military jets and US destroyer clash in Black Sea 'posing danger to stability'
Ed Miliband returns to the backbenches but it's all a bit awkward as he tries to avoid eye-contact with fellow Labour MPs
Photographer who performed naked shoot in China's Forbidden City sparks outrage
Man on naked bike ride gets ejected after becoming aroused
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Why this year's general election was the most unfair in Britain's history
iJobs Money & Business
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...
£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...
£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...