Tag Archives | First Active

What would it take for you to switch your bank?

There’s a lot of talk these days about how our choice in banking is slowly but surely being eroded with the closure of Halifax, Postbank, NIB branches, First Active and the looming threat that both AIB and Bank of Ireland will engage in massive branch closures to save cash.

On that basis, this post may not be all that timely – but I guess after years of recording incidences of where banks repeatedly gouge their customers through multiple overcharging scandals, this post may never be timely in Ireland.

Is there anything that would make you change your bank account – assuming that knowing that your bank is quite likely to steal your money from your account for themselves won’t do it for you.

This article from the Get Rich Slowly website, What Does It Take to Make You Switch Banks?, asks that very question and poses a few scenarios. Are there any of the following points that would cause you to switch your banks:

  1. Higher interest rates on borrowings than the competition?
  2. Lower interest rates on savings?
  3. Poor customer service?
  4. Length of history with your current bank?
  5. The principle of the thing?
  6. Accessibility – particular now with branch closures

Another way of looking at this would be if you imagined what a bank outside of Ireland might be thinking when looking at Ireland to see if it’s worth coming into the market.

We’re going to hear much bleating in the coming weeks and months about the reduction in competition in the banking market, but if people aren’t inclined to switch banks (even during times when we had plenty of competition), what’s the point in calling for more competition if most people are going to stick with the old unreliables?

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Undercharging of customers by Ulster Bank and First Active

This research page on ValueIreland.com tracks the number of overcharging incidents by some of Irelands best known companies since 2004.

Just to be fair, we also keep track where companies have revealed that customers have been undercharged – but have a look just to see how the overcharging (in favour of the company) vastly outnumbers the undercharging (in favour of the customer).

Last week, it was revealed by Ulster Bank and First Active (essentially the same bank now that they’re both owned by Royal Bank of Scotland (RBS)).

According to this article from the Irish Times:

AT LEAST 13,000 Ulster Bank and First Active customers have been told their banks under-deducted Deposit Interest Retention Tax (Dirt) on their savings accounts. The two banks have written to affected customers in the past week about the miscalculation of Dirt. A spokeswoman for Ulster Bank said letters had been sent to 6,500 customers of its subsidiary, First Active. The bank says the miscalculation occurred as a result of a systems error and the average amounts involved for each customer are small – just €1 in the case of First Active.

In this situation, as it’s a tax deduction, the extra money was taken from the customers accounts. In some previous cases, the undercharging banks took the hit instead of taking the money.

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“People with variable rate mortgages have no right to rate cuts”

I’m a big fan of the writings of Karl Deeter on the Irish Mortgage Brokers Blog. His coverage of the many differing finance topics of the day are very readable and most of the time make somewhat complex issues quite understandable.

This blog post, in light of other statements we’re hearing in the media recently, gave a very understandable reasoning for why banks aren’t (or shouldn’t) pass on recent interest rate reductions by the ECB:

People with variable rate mortgages have no right to rate cuts, variable rates are determined by individual banks and while AIB or BOI might be justifiably forced to pass on the rate cuts any bank that was not directly bailed out should be running a prudent business and if rate cuts are not on the table of prudent business then don’t do it.

This post was in response to statements from the Ulster Bank and First Active that they wouldn’t not be passing on the most recent interest rate cuts.

You should read the full post here as it goes on to expose the fallacy of the statement from both banks that they were doing this in favour of their savers rather than mortgage holders since their saving accounts don’t rate in the top 5 of any category.

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