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Monday, 2 July 2012

SHOULD YOU MOVE YOUR BANK ACCOUNT?


I tweeted on 2 July that if the banking fiasco that has affected millions of customers of RBS, NatWest, and Ulster Bank had affected me I would be taking my business elsewhere. Was that a recommendation for others to leave those banks? And if so why?

The fundamental job of a bank is to accept money into our account, pay money out as instructed, and keep an accurate record of the balance. The three banks of RBS Group failed to do that from 20 June after an overnight failure of the software that updates accounts with the previous day’s changes.

As a result money destined for accounts was not correctly allocated, online banking was suspended, direct debits and standing orders were not paid. There were problems with the use of debit cards and many people could not take money from cash machines because their balance did not include credits of pay or pensions that had been made but were not recorded on their account.

For reasons that are not clear the RBS computers had no adequate back up procedure in place and the failure meant that some data was lost from the system. Retrieving that information involved manual inputting which took so much time that the updates for future nights were held in a queue.

The problems for customers continued as the data was corrected and checked and then the backlog was processed in chronological sequence. But the bank has now admitted that was done first for RBS accounts, then for NatWest accounts and only now is it getting round to Ulster Bank accounts.

“Unfortunately for our customers in Ireland, Ulster Bank payments follow in sequence after those of NatWest and RBS. This is because of the way the technology was set-up at the time the 3 banks were integrated.” (see http://group.Ulster Bank.com/media/press-releases/republic-of-ireland/2012/02-07-12.ashx)

Although RBS customers came first and NatWest second the Group will still not confirm – twelve days after the initial error – that the problems of all the 11.5 million RBS customers and 3.5 million NatWest customers have been resolved.

But it does admit that the problems are continuing en masse for the 1.9 million customers of Ulster Bank in Northern Ireland and the Republic who will have to wait longer to get accurate access to their own accounts. It now hopes it will be resolved by the week of 16 July:-

"It is our expectation that by the week beginning 16 July the vast majority of customers will return to a normal service, but some residual reconciliations may be required."

In other words customers of Ulster Bank will be without the correct balances on their accounts and access to money paid in for around four weeks. That will cover paydays on four Fridays and one month-end.

So yes, if I had an account affected by this shambles I would be moving my business to another bank. That would not be out of pique or revenge or just plain anger. But if a bank cannot do the basics – taking in money, paying it out and keeping an accurate balance – over an extended period, why should I stay?

Is that a recommendation that others should move? No. But they should consider their options carefully.

OTHER BANKS
Of course, moving your money to another bank is no guarantee you will avoid problems. It is not just customers of RBS Group who have been affected by its computer failure. The 100,000 customers of Thinkbanking, which banks with RBS, could not access their money until Friday 29th and had another short outage on the morning of 7 July. Ten thousand current account customers of Cumberland Building Society were similarly affected – though they were all protected by the Society itself and had few problemssaw little of the problems. Many small business customers who use Streamline to process credit and debit card payments failed to receive their takings for 20, 25, and 26 June until the morning of Monday 2 July. And unknown numbers of people whose employer banked with RBS, NatWest, or Ulster Bank did not receive their money on time. Some are still waiting.

Even if you open accounts with several unconnected banks there is no guarantee that a failure in one will not affect you if that is the one which receives your regular payments of wages, pensions, or benefits.

Some tweeps have also told me they want to avoid banks that engage in so-called ‘casino banking’ – taking in our deposits and then betting them on the international markets. We know at least one – Barclays – tried to rig the very markets its traders were placing bets on. But RBS, HSBC, and Lloyds are said to be among dozens of banks implicated in the same shady business.

The Co-operative Bank does not engage in casino banking and has a published ethical policy. It looks set to grow when it acquires 632 branches of Lloyds. Three other small banks – Metro, Handelsbanken, and Virgin – do not use money in deposit and current accounts for gambling on the markets. You can read about these four banks here http://www.paullewis.co.uk/archive/saga/2012/20120301Works.htm

There are also five building societies which offer current accounts – Coventry, Cumberland, Leeds, Nationwide, and Norwich & Peterborough.

And 24 credit unions also offer current accounts - here is the list http://www.abcul.org/about/productsservices/cuca

Many of these smaller players still use a big bank as its 'clearing bank' and you may find that payments take longer to go in and out of your account than it would with one of the big five. 

This blog contains information not a recommendation. And remember that whatever you do with your money, if the computers of a major clearing bank go down you may still be affected.