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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.   

Click here to read more about how Northern Ireland Bank Customers are starting a UK Banking Revolution

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.  By April 2008 banks must make all their communications to PCA customers easy to understand and they must properly explain the charges and interest rates applied to PCAs.  By October 2008 banks must give customers better information on their statements, including an annual breakdown of their charges and interest and a regular reminder that the customer has the right to switch to another bank.  Banks will also have to give customers at least 14 days notice before charges are applied and they must give customers who switch a three-month free overdraft to ensure that no additional charges are incurred because of switching. 

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.

Which banks operating in Northern Ireland have to make changes?

Ulster Bank, Northern Bank, First Trsut Bank, Bank of Ireland, Halifax, Abbey National, Nationwide, Alliance and Leicester, Barclays, HSBC/First Direct                 

When will customers see these changes?

Banks are already putting the remedies into practice, but the deadline for all the changes to be made is October 2008. 

Why did the Consumer Council take a super-complaint against the Big Four Banks?

1. The Consumer Council launched the super-complaint in November 2004 because consumers were paying more and getting less in their current accounts.
2. 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.
3. 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.
4. n 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 has been more change in the banking market in the past 3 years since the Consumer Council’s super-complaint than there has been in the past 30 years:
• All of the big four banks have removed charges for setting-up and cancelling direct debits and standing orders.
• Ulster Bank and Bank of Ireland have removed transaction charges and account maintenance charges.
• Ulster Bank and Northern Bank have removed the £6 fee if you lodge a cheque in your account from someone else and it bounces.
• Ulster Bank has 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.