Barclays and NatWest are the
only major UK banks offering products that significantly improve
customers’ financial well-being, according to a report from UK
charity FairBanking. The study claims to be the first survey to
assess products using a measurement system based on financial
well-being criteria, reports Farah Halime.
Barclaycard’s Flexi-Rate card, savings
accounts from NatWest, Saffron Building Society (SBS) and O2’s Cash
Manager are the only UK banking products to contain features that
can significantly improve customers’ financial well-being,
according to a rating system launched by UK charity
The remaining UK banks and mutuals scored zero
for savings products, while half of credit card providers received
a similar ranking.
Although Barclays only received a one-star
rating, it scored more points on encouraging debt repayment by
charging a lower interest rate to cardholders who repay more than
the minimum each month, and for offering customers a breakdown of
their spending by category.
The bank’s product would have received a higher
star rating if it was more widely available, but it is not offered
to existing Barclaycard customers.
But the report acknowledged that in the UK, Barclaycard has
“made a big step forward” by using its www.mybarclaycard.com site
to allow customers to analyse their expenditure category and create
their own categories.
US trumps UK across the
FairBanking calculated the ratings
depending on the extent to which a product contains features that
are likely to improve a customer’s level of financial
These include incentives to continue with
savings plans, debt reduction plans, integrated budget calculators
and balance alerts and messaging.
While the Barclaycard’s Flexi-Rate card
received a favourable mention, it was compared unfavourably to
Discover’s US-based credit card, which achieved a three star
In particular, the Discover product was praised
for its alert and balance messaging service as well as its
breakdown of expenditure; it also encourages planned repayment of
the outstanding balance.
Four of the credit cards analysed – from
American Express, First Direct, Tesco and RBS/NatWest – were
identified as offering a good range of account balance information
and alerts, for example when customers approach credit limit or a
reminder to make the minimum payment. By contrast, cards from
Citibank, Halifax and Capital One were all awarded no points.
In the savings account sector, the Goal Saver
Account from regional-based mutual SBS was the highest ranked
account, with three stars.
The account encourages customers to set
multiple savings targets for specific purposes, such as a mortgage
deposit or an emergency fund, by creating an online financial plan
that can be updated regularly.
SBS has plans to capitalise on its success by
launching an improved version of the account with additional
planning functions in May.
FairBanking said the new account would warrant
a four-star rating.
The US also trumped the UK in the current
accounts survey with a checking account from the country’s
fourth-biggest bank by assets, Wells Fargo, assigned a four star
Features of the Wells’ account which
contributed to the high ranking included:
• Full budgeting,
• Alerts by e-mail and
• Establishment of a debt
repayment plan; and
• Integration with a
complimentary savings account.
While the report said there was no similar
product on offer from a UK bank, it highlighted the O2 Cash Manager
account (managed on behalf of the telecom supplier by NatWest) as
“a credible equivalent.”
Alliance and Leicester, First Direct,
RBS/NatWest and Lloyds all received a one-star rating because of
the level of alerts and account balance functions offered to help
customers have greater control.
On the upside, the report saw the low ratings
of financial products in the UK as an opportunity for
“There is huge scope for improving products
based on areas such as realistic targeting and creating incentives.
These can help customers to have more control over their finances,
not to acquire debt inadvertently and to increase saving,” the
“What we are looking for are financial
products that are low in salt and fat, and high in nutrition – all
served on a sesame seed bun.”