By Daniel Hunter
Savers resent banks ‘gambling’ their deposits on the money markets, and are demanding increased transparency over where their cash is being invested, according to a study by the Institute of Customer Service (ICS).
The research among 1,000 consumers, released today, reveals lingering fears over the viability of banks and stark opposition to bank charges.
Savers welcome recommendations by the Independent Commission on Banking (ICB) to ring-fence investment and retail banking and increase transparency over investments, the Institute found.
Almost half of UK consumers (44%) resent their bank ‘gambling’ with their finances on investment markets.
More than four years after the run on Northern Rock, more than a fifth (21%) of savers still fear that their bank may go under.
As a result, customers welcome Sir John Vickers’ recommendation to ring-fence banks’ retail operations: the strong majority (70%) feel safer in the knowledge that their account would be separated from the investment arm of their bank.
Consumers also welcome the increased transparency recommended by the Vickers Report, particularly over where their savings are being invested.
More than four fifths (81%) wish to be told where banks intend to invest their deposits, whilst more than two-thirds (69%) agree that increased transparency would affect their choice of bank.
“Historically high street bank customers in the UK have been reluctant to move their bank accounts but this is changing," Jo Causon, Chief Executive of the Institute of Customer Service, commented.
“As consumers become more informed and discerning about where their money is invested, those banks that genuinely create a banking experience that is easy, jargon free and transparent are more likely to attract and retain their customers.”
In response to the ICB’s report, UK banks warned of a possible end to free banking — a development that customers are not happy to accept, according to the Institute’s study.
Almost three-quarters (73%) believe they should not have to pay a monthly charge for their standard current account, while more still (76%) believe cashpoint withdrawals should remain free.
As a result, the vast majority (90%) would consider switching to a competitor offering free banking.
“Impending banking changes create a real challenge for banks. At a time when trust is at an all time low, banks need to seek competitive advantage by enhancing — rather than cutting back — their overall service offering and balancing their commitments to shareholders,” Causon concluded.
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