Matthew Revell

Apparently, British people are more likely to remove their eyes, rinse them in vinegar, roll them along a saw-dust floor, then pop them back in the wrong sockets than they are to change bank.

I regularly switch providers of all sorts of services: electricity, gas, mobile, insurance and, rather than mutilate my seeing-spheres, I’ve been searching for the right bank.

This month, we’re moving from Nationwide’s FlexAccount to First Direct’s imaginatively named Bank Account. So, what’s so bad about Nationwide?

Why we moved to Nationwide

I admit it: I fell for Nationwide’s Proud to be different tag-line. I suffered a naive delusion that being a mutual - i.e. notionally owned by its customers rather than shareholders - would result in not only outstanding customer service but would see the customers’ interests put before all else.

After all, the FlexAccount’s charges seemed to back up my impression: no additional charges for using the debit card abroad, no charge to stop a cheque or, from what I remember, for duplicate statements. The in-credit and overdraft interest rates were good.

After horrendous service from Alliance and Leicester and years of silly mistakes from Lloyds TSB, I wanted to believe that Nationwide could be different.

The switch

The switching service offered by UK banks seems pretty labour-intensive but not exactly difficult:

1. New bank writes to old bank, asks for a list of direct debits and standing orders.
2. Old bank sends details to new bank.
3. New bank checks with you that they’re all correct.
4. New bank sets up standing orders and writes to direct debit beneficiaries to alter the direct debits.
5. Within a couple of weeks everything should be switched over and, optionally, your old bank will close your account.

There are many potential failure points. The greatest potential for failure lies with the direct debit beneficiaries, as communication between the new and old banks must be complete within regulated time-frames.

For whatever reason, Nationwide had a hard time in switching our account from Alliance and Leicester. Wherever the blame lay, Nationwide passed-up the opportunity to turn me from a disappointed customer into someone impressed by their concern for my happiness.
Rather than update me with reasons for the delay, they appeared to ignore the problem.

Calls to their customer service team invariably resulted in 20 - 30 minutes of hold music and, when the call was finally answered, a total lack of useful information.

It was only because our previous bank - Alliance and Leicester - had been so horrendously inept that I was determined to plough on with Nationwide. Eventually, though, I had to do something.

As one of Nationwide’s owners, by virtue of being a customer, I felt I must have a better course to complaint than with a traditional PLC financial service provider. The Nationwide website cheerfully told me to phone with my complaint. Rather than wait 20 - 30 minutes in yet another queue, I wrote directly to the Head of Member Service, explaining my dissatisfaction with the switch process and lack of staff in the call centre.

He didn’t reply. Instead, my local branch’s manager phoned me. Not good enough. I had taken my time to write to the Head of Member Service, not the branch manager. I was a member and so part-owner of the business. The least he could have done was reply to me to say that he’d asked my local branch’s manager to help me.

The branch manager did his best to help and gave his direct number, despite it being against Nationwide’s policy to do so. Eventually, after much chasing, the switch went through.

An unexpected debit for £18,000

Following the switch, things went smoothly until a statement arrived with an unexpected debit for £18,000 to AA Savings. £18,000!

A quick call - to the branch manager on his direct line, of course - and it became clear that Birmingham Midshires - the provider behind AA Savings - had mistakenly used our bank account details in setting up another customer’s direct debit.

Two things worried me:

• the ease with which Birmingham Midshires could take £18,000 from my account
• Nationwide’s nonchalance to such an obviously atypical transaction.

Many other providers, I believe, would have contacted me, via their fraud team perhaps, to question such a transaction. Nothing in my history with Nationwide suggested this transaction was normal.

Nationwide had carefully raised my expectations of their service, insisting through their marcomms materials that I should expect to have my needs put first. Nothing in the way they handled this error, or the switch, suggested that they had the infrastructure or institutional culture necessary genuinely to put customers first.

Member TalkBacks and the end of free banking

Nationwide holds regular, online feedback sessions, where pre-selected customer questions are answered by the society’s middle and top management. Unfortunately, I can’t find logs of these sessions. However, the evasiveness of some the responses seemed to be in direct opposition to the claims to be different.

But then, how different is Nationwide? Pay-offs to retiring directors and a call for the end of free banking from the incoming Chief Executive make it hard to see.

The Portman merger

I can see benefits from Nationwide merging with Portman, the UK’s second largest building society. Portman has a largely unspectacular product range but many customers. The merged society will be in a better position to compete, hopefully offering better products and pricing.

However, the merger is heavily weighted against Nationwide customers. Here’s why:

• Nationwide members had no vote in the matter.
• Portman members had the say over whether the merger went ahead.
• Nationwide members will receive no payment following the merger, even though as the larger group the cost of the merger will inevitably be born largely by them.
• Portman members will receive a windfall payment following the merger, despite losing nothing whatsoever as a result.

So, where does mutuality get Nationwide customers in this case? If Nationwide were a PLC, I wouldn’t expect to have any say in whether or not it merged with another organisation. However, as a Nationwide member I’m expected to accept the board’s wisdom, while Portman members get a vote.

Of course Portman members will vote “yes”. Not only do many of them have no loyalty to Portman itself, having only recently joined Portman as the result of other mergers - with the Lambeth and Staffordshire societies, for example - but they get a few hundred quid in the bank in exchange for precisely nothing. If the customers of a company I don’t use were offering to give me free money, I’d say yes.

Final straws and all that

The windfall for Portman customers was the last straw, for me. Graham Beale’s assertion that free current account banking is unfair wasn’t a good precursor of how the newly enlarged society would operate.

So, when First Direct offered me £100 of hard, cold cash to switch, I worked out that I’d still be better off despite their lower interest rate. I’d also heard many good things about First Direct.

So far, the difference has been remarkable. Indeed, here I am remarking on it. Phones answered almost immediately by knowledgeable, friendly staff. Good communication. A hassle-free switch. It’s early days but looking good so far.

I think the sad truth is that Nationwide is complacent. It believes its own advertising - i.e. that being customer-owned makes it better. It doesn’t. Being customer-focused makes for good service and, right now, Nationwide feels too much like a bureaucratic local government department.

I hope that First Direct - which answers to HSBC’s shareholders - will use the profit motive to provide me with a good service. After all, what motive does Nationwide really have? Other than a handful of demanding customers, who is really pushing Nationwide to deliver? With no shareholders, perhaps there’s no real accountability.