What was the outcome of the Consumer Council Super-complaint against the Big Four Banks and the Competition Commission Inquiry?
In May 2007 the Competition Commission confirmed the Consumer Council’s concerns that bank customers in Northern Ireland are not being offered fair and competitive personal current accounts (PCAs). This announcement brought to conclusion a two and a half year investigation which started in November 2004 when the Consumer Council and Which? made a super-complaint against the big four banks – Bank of Ireland, First Trust Bank, Northern Bank and Ulster Bank.
What changes have to be made by the banks to make the market better for consumers?
The Competition Commission has set out a list of legally binding remedies that the banks must implement.
The Consumer Council welcomes these changes. For the first time, the Competition Commission has put measures in place to encourage customers to switch banks and take control of their banking to get the best deal possible.
In summary the changes are:
- Stop using ‘bank-speak’ or jargon – make communication with customers clear and easy-to-understand.
- Explain charges – tell customers how much will be charged and why.
- Give switching customers a free 3 month overdraft to remove the hassle and fear of switching.
- Give customers an annual ‘wealth-check’ so that they know how much their account has cost them.
- Give customers at least 14 days’ notice before they take penalty charges from their account.
- Send an annual reminder to customers about their right to switch to another bank.
- Provide better information on statements including details on charges and interest rates.
Competition Commission Remedies update May 2009- please click here for more information.
Which banks operating in Northern Ireland have to make changes?
Ulster Bank, Northern Bank, First Trust Bank, Bank of Ireland, Halifax, Abbey National, Nationwide, Alliance and Leicester, Barclays, HSBC/First Direct
When will customers see these changes?
All the changes had to be in place by 1 April 2009.
Why did the Consumer Council take a super-complaint against the Big Four Banks?
- The Consumer Council launched the super-complaint in November 2004 because consumers were paying more and getting less in their current accounts.
- Customers of the big four banks were charged up to 21 times more to run a £500 monthly overdraft than those who held accounts with Which? Best Buys.
- Customers of the big four banks pay more for their current account than customers of other banks. Over the four years between 2002 and 2005 £120 million was needlessly paid to the big four banks by their customers.
- In 2005 customers of the big four lost out on £15 million in credit interest (before tax).
What effect did the Consumer Council’s super-complaint have on the banks?
- There was more change in the banking market in the 3 years of the Consumer Council's super-complaint and the Competition Commission inquiry than in the past 30 years.
- All of the big four banks removed charges for setting-up and cancelling direct debits and standing orders.
- Ulster Bank, Bank of Ireland and First Trust Bank removed transaction charges and account maintenance charges.
- Ulster Bank and Northern Bank removed the £6 fee if you lodge a cheque in your account from someone else and it bounces.
- Ulster Bank established a dedicated team of 20 to help customers switch accounts to them. They also introduced a £150 cash incentive and 3 month free overdraft for switchers during the month of May 2007.
- All of the banks have increased the visibility of their advertising profile with TV, newspaper and billboard advertising.
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