A friend in need

Adam Bernstein points out why it’s important to make your bank manager your friend

T HE world of banking is undergoing change, no doubt spurred on by the rapid advance of internet banking and branches being closed. Anecdotally, it’s been said that we’re more likely to divorce than change bank. With this in mind, could it be time to benchmark your banking arrangements? If so, how can you find the best deal for you? What should you consider?

The first thing to note is that while it makes sense to consider the cost of the new facilities, it’s only one part of the overall calculation. But that’s not to disregard cost as it’s possible to pay Santander no transaction fees in exchange for tiered monthly charges from £7.50 that depend on the amount of cash deposited.

But rates can be as high as £1.50 per transaction plus a £6.50 monthly fee with Barclays e-Payments Plan. It’s important to remember the cost of the overdraft – fees here can be weighty. Firms should also think how the bank handles foreign currency transactions and out-of-hours support.

As we’ve seen, branches are closing so if being able to deposit cash, or having a branch close to hand because you want face-to-face contact and advice is of value, you’ll not want to bank exclusively via post-box or online. However, the Post Office is stepping partially into the breach and accepts deposits for most high-street banks.

Another consideration is the splitting up of your needs between different institutions. You don’t have to have a company credit card from your current account bank. Similarly, you can move savings accounts, insurance and business mortgage to whoever gives the best deal.

Where do you keep your personal accounts? It’s a small thing, but those that bank with RBS, Natwest and Santander (for example) can see their personal, business and credit card accounts on one webpage; this makes for greater account visibility and simpler moving of funds between accounts.

What is your view on bank security? Nationwide, for example, require a card and card reader each time the account is accessed on a computer – but use an iPhone and accounts can be accessed by fingerprint which means there’s less to carry around (setting up a new transaction needs the security device though).

Others, such as HSBC, are moving to voice recognition but still use a key code generating dongle. Again, something else to carry around, albeit in a smaller packet. Ask the bank and see if their system works for you.

Allied to processes, is statement data downloadable in a format that your accounts software can import and use? If you manually reconcile statements, check if the columns of your software (debit/credit) are in the same order as the statement. It’s a small thing, but mismatching columns will cause eyestrain and lead to errors.

Also think about the location of call centres. Are they UK-based or have they been offshored? Speaking to operators in a call centre isn’t always easy but a strong overseas accent and a lack of understanding of the nuances of British life can make the relationship harder to maintain.

Before you move, consider your borrowing needs.

If business is tough and the overdraft is maxed out, you may find your options more restrictive, especially if your credit rating (personally and commercially) is a little shaky. While you may get a lower cost deal elsewhere, your present bank may be the most likely to extend borrowing as you’ll have a track record.Don’t ignore interest on cash balances (such as tax, VAT and any client deposits) you hold. Unlike personal accounts, few business accounts pay interest and leaving large balances in a current account is clearly pointless; look at a business savings account.

Rates do change and the higher the rate the longer the notice period so be careful when tying up deposits.

For example, at the time of writing (27 February 2017), a minimum £1,000 investment in Aldermore’s Customised Fixed Rate Business Savings Account will pay between 0.9% and 2% depending on the term (60 days to five years).

Nationwide does something similar with accounts that need £10,000 to open and which range from instant access (0.4%) to one year (0.65%).

Just like checking your utility bills, so you should check your banking arrangement. If you feel you can get a better deal elsewhere, call the bank’s bluff and see if they can improve on what they’re charging – it’ll make for a simpler process if you don’t need to move.

But if you need to jump, with fast and almost automated switching being offered by most banks, the transition from one institution to another should be seamless.

Panel: Banking websites
While a walk down the high street is one option to find a new bank, there are many related websites that KBBs can turn to when choosing a bank.

The first is Business Banking Insight (http://bit.ly/2l3DnZU). Run by the British Chambers of Commerce and the Federation of Small Businesses, it’s independent of any business banking provider, regularly surveys thousands of SMEs, is free to use and offers ratings on the institutions – not accounts - based on fees, contact, treatment, client interest and client understanding.

Since the removal of the British Banking Association’s (BBA) account finder tool, finding the detail of bank accounts is now harder.

Moneyfacts.co.uk (http://bit.ly/2lzkJew) looks at the main high street banks, as does Moneysupermarket.com (http://bit.ly/QuyidV) albeit in more detail. Moneysavingexpert.com (http://bit.ly/2gq4Fva) offers more of a narrative about products and offerings and gives a best buy. You can find a longer list with direct weblinks at Betterbusinessfinance.co.uk (http://bit.ly/2mgrRwh). The longest list is at Wikipedia (http://bit.ly/2kQjn1L).

However, it’s not overly helpful beyond linking through to detail on the institutions – you’ll still need to find their websites and navigate to find to the right products.

Do keep an eye out on the BBA’s business site (http://bit.ly/2luCuNO) - the finder tool is meant to be making a return. It is (was) the simplest way of seeing all the institution’s products in one place together with pricing options.

Panel: Getting redress
Fighting a bank or financial institution can seem like a David and Goliath rematch. However, private citizens and small firms with less than 10 employees and a turnover of under €2m (an EU definition) can access the Financial Ombudsman Service (FOS).

Established in 2000, the FOS can examine complaints about any financial product and can make compensatory awards of up to £150,000 if appropriate. The service is free to complainants and is paid for through a levy on financial institutions and case fees payable by those being investigated.

The ombudsman can deal with matters such as banking, insurance, pensions, savings, investments, credit cards, loans, hire purchase, stocks and shares as well as financial advice. The FOS can also look at most complaints that involve a consumer credit transaction.

There are procedures to follow before the FOS can intervene. In essence, the institution has eight weeks to investigate the matter before issuing a ‘deadlock letter’. To lodge a complaint, the matter must be put in writing in a way that explains clearly what has gone wrong and what the complainant would like the institution to do to put things right.

Complaints can be lodged within six years of the event, or three years when the complainant could have reasonably known about it.

The bonus for the complainant is that process is non-binding - the complainant doesn’t have to accept the ruling of the ombudsman and they can still decide to pursue a claim through the courts.