The total number of complaints reported by regulated firms reached a record level of 4.13 million during H1 2018.
While PPI was the most complained about product (42%), some 15% of all complaints received were about current accounts.
Current accounts saw an 18% increase in complaints, from 509,092 in H2 2017 to 600,358 in H1 2018.
The FCA reported that, excluding PPI, the total number of complaints firms received in H1 2018 increased by 9% from 2017 H2.
The regulator said that around half of this was due to the increase in banking and credit card complaints made to TSB about disruption to banking services following its move to a new IT platform on 22nd April 2018.
Why are current accounts the second most complained about product?
“The way banks have traditionally made money from current accounts is from the fees incurred when you go into your overdraft”, said Sven Schindele, head of banking products at Tandem.
“Some banks have failed in the past to be clear with their customers on what fees they are charged and when.
“You can imagine how angry you would be if you were charged for going over your limit without any prior warning.”
Siddarth Parashar, chief revenue officer at Firstsource, added that people were dependent on the smooth running of their current accounts.
“Unlike other financial services products, most people use their current accounts at least once a day, and the majority of people rely on them for basic activities; anything from buying lunch to getting the train home.
“The rise of contactless cards has massively fuelled this increase, and as growing numbers of people ditch cash for purchases and use their card, current accounts cannot afford to go awry.
“In my experience, if someone doesn’t have access to their savings for a day or two, they will likely just wait for the problem to be resolved.
“However, when there is a glitch with a current account, people will pick [up the phone] straight away to make a complaint.
“Current accounts are a necessity today and having them out of action is not an option for customers.”
What can be done to decrease the number of complaints current accounts receive?
Sven added that banks should always be upfront about fees and be transparent about how much they are charging their customers.
“Banks should also notify customers that they have gone into their overdraft and give them a couple of days grace period to deposit money without being charged any fees.
“It’s not uncommon for customers to have money sitting in a savings account while being charged for ‘borrowing’ money through an overdraft when they didn’t need to borrow, they just didn’t realise they had run into their overdraft.
“Another aspect is that with a customer's data you can offer them a significant amount of insight on how much they can really afford to spend.
“What is worrying is that people use overdrafts as a safety net when finances get tough.
“Depending on the overdraft, many people would be better off seeking alternative financial products that are tailored towards responsible borrowing.”
Siddarth said that the best way a company could reduce its number of complaints was to understand and define its customer journey.
“This can be done with a two-step straightforward process.
“Firstly, develop proper segmentation by capturing customer behaviour with smart analytics, and investigate the different ways customers approach their requests.
“Thoroughly understanding each customers’ behaviour is a crucial step in offering them [a] service that works.
“Secondly, identify channels that customers use to interact with your business – delving into the details of who is contacting you using what channel and how these channels are accommodating different requests is mandatory in understanding how each channel can serve customers better.”
What effect do these results have on the specialist finance industry?
Sven concluded that the results demonstrated how there had been a huge shift in the banking sector.
“One size doesn’t fit all, and customers are seeking a personal banking experience that offers fair solutions to real-world problems.
“This can be an opportunity for specialist banks as consumers who are annoyed with their core start looking elsewhere for banking products.
“You can use tech and data to provide this service, providing useful prompts for staying on top of your money throughout the month, tracking spending and alerting customers when the money is going to run out, before it’s too late.
“If your business is reliant on your customers struggling, there is something wrong.”
SIGN UP TO OUR NEWSLETTER TO RECEIVE MORE NEWS LIKE THIS STORY
Nationwide partners with seven fintechs to support financially squeezed
Nationwide Building Society has selected seven fintech companies to create apps that will increase financial capability...
Metro Bank to open first store in Liverpool
Metro Bank is set to open a new store in Liverpool on Paradise Street...
Investec removes SVR from all new fixed rate mortgages
Investec Private Bank has removed the standard variable rate (SVR) on its two-, three-, four-, five- and 10-year fixed rate product range for all new clients...
Mid-size automotive manufacturers miss out on £25bn in revenues
UK mid-sized automotive manufacturers could be missing out on £25bn in revenues as a result of insufficient access to funding, according to research from Wyelands Bank...
Leek United hires new finance director
Leek United Building Society has named Rob Broadbent (pictured above) as its new finance director...
Handelsbanken posts 7% lending surge
Handelsbanken has revealed in its latest quarterly results that its UK lending increased by 7% to £21.1bn in Q1 2019 compared with the same period last year...
Al Rayan Bank expands Birmingham headquarters
Al Rayan Bank has expanded its operational headquarters in Edgbaston, Birmingham...
Cynergy Bank bolsters senior leadership team
Cynergy Bank has strengthened its senior leadership team with two new appointments...
Dispelling overseas property investment myths
When people talk about overseas buyers ‘snapping up’ UK property, assumptions about their supposed negative impact on the housing market abound...
Arbuthnot Latham appoints private banker to Manchester office
Arbuthnot Latham has announced the appointment of Barry Grieve as senior private banker to its Manchester office...
United Trust Bank launches exclusive broker promotion
United Trust Bank (UTB) has launched its 2019 ‘Live and Learn’ broker promotion...