Virgin Money diddling savers

From here [current], Virgin Money are attempting to get those who have money they want to put into an ISA next tax year (April 6th 2012) to save with them now:

Virgin Money encourages the Early Birds

Virgin Money have continued their mission to make banking better[1], with details of a new ‘Early Bird ISA’[2] being released.

Those of you who currently have an ISA will be familiar with the limitations of only being able to put a certain amount in the account each year, making planning ahead that little bit more difficult.[3]

As a keen innovator[4] Virgin Money has sought to bypass this problem by allowing customers to open a savings account now and load next year’s ISA limit into it, with the bank paying the same interest that you’d get in a tax free ISA.[5]

Once the new tax year begins on April 6th Virgin Money simply drop your savings (and any interest accrued) into your ISA, the Early Bird ISA pays an equivalent rate of the Virgin Money ISA[6] – both of which are tax free.[7]

For those not au-fait with what cash ISA's are, and can't be bothered clicking the wiki link above, all interest on 'normal' cash savings in the UK is taxed at the marginal income tax rate of the person earning that interest. Typically this is 20%[8]. So, if you earn £100 interest on your savings, £20 will be deducted at source.

ISA's pay their interest gross, i.e. the interest isn't taxed at source, and it doesn't need to be declared to HMRC. The amount you can save per year is limited (£5,340 for 2011/2012) on a 'use it or lose it' basis.


[1] Well they can't do much worse than Natwest's 'helpful banking' I suppose...

[2] I think the ASA might have something to say about the naming of this - it's patently not an ISA.

[3] Seriously guys, it's a bit patronising to accuse your (potential) customers of being thick/unable to plan if they're actually able to accumulate savings (i.e. plan ahead) to put into the next year's ISA before they 'open.'

[4] A previous innovation was to offer only current accounts that charge £60/yr. The next innovation was to offer fee-free accounts after they were criticised for their last innovation.

Another innovation is their rather expensive tracker fund [current] that costs 1% per year. Three to four times as much as cheaper funds that do exactly the same thing.

[5] This is where the bollocks comes in. The whole point of ISAs is to get interest tax free. So in theory, banks should provide savings accounts with the same rate across the board. For example, if BarcWest Bank decides to offer savings accounts at 4%, they'd offer a regular savings account where tax is deducted at source (net of 3.2%), and an ISA savings account where tax isn't deducted ('net' 4%.)

What Virgin are doing is offering, is the equivalent of a regular savings account at 4%, and ISA savings accounts at 3.2%.

[6] Despite my illustrative examples above, Virgin are only offering 2.85%[current]. Inflation is currently running at 4.8%. Best instant access ISA I could find at the time of writing elsewhere is 3.10%[current]. Virgin being innovative again it seems, by having a crap rate.

[7] No, no, no! They are not both tax free. The 'Early Bird ISA' is not tax free - I'm assuming they've simply upped the taxed account's rate such that the net it pays is the same as it would be if it was in an ISA.

Presumably this is just for 20%er's - they don't go into detail about the 40/50%er's who have to fill out self-assessments and fork out the other 20% at tax-year-end.

This is akin to the "we'll pay your VAT" adverts that are seen - VAT is still payable on the (new) sale price - it's simply that the sale price has been reduced to the pre-VAT value on the original price.

[8] Higher rate tax payers pay 40% or 50% depending on their income, and a small proportion of people only pay 10% if savings interest is their only income up to a certain amount.

Update (2): Natwest - (not so) helpful banking

Back in August '10 I brought up Natwest's "Helpful Banking." advert.
In December '10, they got slapped down by the ASA for not opening as many branches on Saturdays as they appeared to imply in that advert.


Now it appears that they aren't really living up to the rest of that advert.

Deloitte (an auditor) was hired by Natwest to monitor them for how well they were living up to their 'promises.'

A sample[current] of what they promised to do:

3. We will provide you with friendly, helpful service whenever you deal with us
We're aiming to get 9 out of 10 customers to rate our service as helpful.

90% satisfaction? Wonder how they're going to select the people they're going to question.

Either that or the fact that the other 10% of their customers are costing RBS/Natwest £2.8m due to mishandling of complaints in the space of 6 months[1] suggests that when things go wrong, customers would be better off at Santander.

9. We pledge to stay open for business if we are the last bank in town and will consider a range of options to ensure a local banking service is available
We’ve already identified over 100 ‘Last in Town’ locations where we’ll continue to provide a local banking service.

Woolly description of what "last in town" means, especially when by the industry definition, Natwest is already the "last bank in town" in 217 locations. I somehow thing it's stretching the weasle phrase "over 100" to cover 217, so that means they're quite able to shut "up to" 116 branches and still keep this 'promise.'

"Local banking service" is also similarly woolly. It's not a hard and fast commitment to actually operate a brick-and-mortar branch (Saturdays or not.) Perhaps they're going to buy some more white vans.

13. Twice a year we will publish the most common of complaints
And we’ll strive to address the causes

It's been 7 months since the adverts. I could be wrong, but if you're going to do something twice a year, it's generally accepted that they should be 6 months apart, so that mean they should have published at least one list.

Strangely I've not seen it, and it's certainly not linked on that page.


Anyway. How did they do?
(I couldn't find the report/PR, so this is based on the sparse news reports currently out there.)

Out of their 25 goals, they passed 20, and failed 5. That's 20% failure.  (Or a "80% success rate" as Brian Hartzer, head of Retail Banking, would have you think of it.)

Possibly an acceptable result had the goals been externally imposed, but these were self-imposed.

2. We will aim to serve the majority of customers within 5 minutes in our branches
This year we’ll introduce a new queue busting programme in our busiest branches to ensure every available member of staff is out serving customers during busy periods.

75% of customers were served in under 5 minutes. Presumably leaving the other 25% waiting half and hour. Or more.

3. We will provide you with friendly, helpful service whenever you deal with us
We're aiming to get 9 out of 10 customers to rate our service as helpful.

Only 80% of customers believed the hype. The still suspiciously high number is probably down to either judicious selection of the people questioned, or biased questioning. Again - few details available.

4. We will help you to make the right choices for you and your money, providing a clear product range with simply explained features and charges
All of our branch literature will be simplified and rewritten in line with customer feedback. We’re also introducing a new Customer Service Review programme to make it easier for our customers to choose the right product for them.

This appears to be another one. Bugger all detail apart from they've reduced the number of products from 600 before the banking crisis to 200 now.

12. We will resolve customer complaints fairly, consistently, and promptly
We are aiming for 75% of customers to be satisfied with the way their complaint has been handled.

Way short. 57%. And that includes a 41% increase in complaints about the group in the 2nd half of 2010. Perhaps RBS/Natwest were encouraging more people to complain so they could (attempt to) satisfactorily solve them to push the %age up?


Sadly none of the news reports coming up on Google News at the moment have the 5th missed target. Indeed, none of them list the four I list above in much detail.



[1] Ok, it was the first half of 2009, but the timing of the fine coinciding with this report from Deloitte is rather embarrassing.

Update: Natwest - helpful banking

2011/03/03: Update: Natwest fail to pass a fifth of their self imposed targets.


Back in August I pulled Natwest's Helpful Banking advert apart thusly:

It's why, when you told us to open on Saturdays, we did.[2]
And why 160 branches will open earlier, or close later.

[...]
[2] Which banks don't have branches open on Saturdays? And I note that they don't qualify this by saying how many of their branches are open on Saturday. (I'm assuming it's not all of them since their branch locator has a check box for listing only those open on Saturdays.)

It would appear two others noticed this and put in a complaint to the Advertising Standards Authority (I was not one of them) and Natwest got a slap on the wrist as a result:

Issue

Two viewers challenged whether the claim "It's why, when you told us to open on Saturdays, we did" misleadingly implied that all NatWest branches were open on Saturdays, which they understood was not the case.

Response

[...] [Natwest] said they had a long history of Saturday openings and, in response to customer demand, 675 of their 1552[1] branches were currently open on Saturdays.

Assessment

Upheld

The ASA noted the ad focused on the NatWest Customer Charter, but nonetheless considered that viewers would understand the claim "It's why, when you told us to open on Saturdays, we did" to mean that all NatWest branches were open on Saturdays. Because we understood that that was not the case, and there was no qualification in the ad to explain that the claim applied to selected branches only, we concluded that the ad was misleading.[...]

Action

The ad must not be broadcast again in its current form.

[1] That'd be 43% then - not even 1/2 of them.

Natwest - helpful banking

2011/03/03: Update: Natwest fail to pass a fifth of their self imposed targets.
2010/12/16: Update: Natwest have been told to stop using this advert.

Helpful Banking Char..
Watch the ad...

Natwest is making a public promise to become[1] Britain's most helpful bank.
This is a real commitment.
It's why we've created our customer charter.
It's why we've listened, and will continue to listen, to thousands of customers across the country.
It's why, when you told us to open on Saturdays, we did.[2]
And why 160 branches will open earlier, or close later.
It's why we're committing to deliver over 25,000 MoneySense for schools lessons.
It's why we devote over 15,000 staff days each year to help local communities.
It's why we'll continue to run mobile banks to serve remote areas.[3]
And why, with our queue busting programme, we aim to serve our customers within 5 minutes. But we know we can do more. You see when we say helpful banking, we want to make sure [garbled]
To find out more visit our website. Natwest. Helpful banking.

Sadly, it would appear, they are still only thinking about 'helpful banking,' rather than actually providing it.

Dorothy Southernwood, wanted to pay a bill, but was unable to because her bank manager refused to allow the payment.

The bill? £27,000. Did Mrs Southernwood have the money in her account? Yup.

Was the payee at all suspect? Well, no - it was the German clinic Mrs Southernwood was attending for cancer treatment.

What did the helpful bank manager do? Even after 5 days of frantic phone calls, she insisted Mrs Southernwood provide written authority from Germany.

In order to try and show willing with the clinic, Mr Southernwood withdrew cash from machines, until the helpful bank helpfully stopped his card after £860.

Rather more helpfully, the bank backed down once they started to be questioned by the press.

[1] They have a long way to go, even though none of the UK banks could be considered particularly helpful. I'm looking at you Santander. I note there's no time scale for when they will actually be Britain's most helpful bank.

[2] Which banks don't have branches open on Saturdays? And I note that they don't qualify this by saying how many of their branches are open on Saturday. (I'm assuming it's not all of them since their branch locator has a check box for listing only those open on Saturdays.)

[3] Perhaps if they hadn't have closed down their branches over the years there wouldn't be a need for 'mobile branches.'