Big Banks Ripping Off Customers with Poor Value Products

Strategic Insights -

The Consumers' Association has launched a scathing attack on major banks, accusing them of selling poor value products to customers. A survey by the Association's magazine Which? found that consumers who opt for mortgages or savings packages from the biggest banks are wasting hundreds or even thousands of pounds. The survey looked at a range of products from Individual Savings Accounts to loans, insurance, credit cards, and mortgages, covering the seven biggest current account banks, including Abbey National, Barclays, First Direct, HSBC, Lloyds TSB, NatWest, and the Royal Bank of Scotland, as well as the Nationwide Building Society.

Key Takeaways:

  • The survey found that shopping around for savings accounts could earn savers up to £288 in interest a year, with Nationwide Building Society offering the best rate at £250, and Royal Bank of Scotland managing just £90.
  • The best five-year fixed-rate mortgage on a £60,000 loan would cost £16,750 over the five-year term if home-buyers looked for the best deal, with NatWest coming closest at £17,396 over the five years.
  • All of the biggest eight banks surveyed failed to match the best rates for savings accounts and mortgages, with even the top performer, Nationwide Building Society, coming in at £50 less than the best rate for a savings account.
  • The survey's findings highlight the importance of shopping around for financial products, as consumers can avoid wasting hundreds or even thousands of pounds by choosing better deals.
  • Helen Parker, editor of Which?, said that the survey shows most big banks offer "appalling value for money" and reward customers' loyalty with poor value products.

Statistics:

  • £5,000 invested in an instant access account could earn up to £288 in interest a year if savers shopped around.
  • Nationwide Building Society offered £250 in interest a year as the best rate.
  • Royal Bank of Scotland offered just £90 in interest a year.
  • The best five-year fixed-rate mortgage on a £60,000 loan would cost £16,750 over the five-year term.
  • NatWest's five-year fixed-rate mortgage cost £17,396 over the five years, the closest to the best rate among the surveyed banks.

Sources:

  • Consumers' Association
  • Which? magazine
  • Abbey National
  • Barclays
  • First Direct
  • HSBC
  • Lloyds TSB
  • NatWest
  • Royal Bank of Scotland
  • Nationwide Building Society