Comment: Can RBS come up roses by dropping teasers?
Standard’s comments on independence on Thursday ensured that RBS boss McEwan’s speech on making the bank “smaller, simpler and smarter” and putting “the needs of its customers at its core” received little scrutiny.
McEwan’s comments, though welcome, were something of a diversionary tactic and best taken with a pinch of salt. He talked about some of the relatively mundane details that nevertheless infuriate many ordinary bank customers, such as the short-term “teaser” rates on savings accounts and the favourable deals given through online channels.
Both will be scrapped over the coming weeks as the bank simplifies its savings range. McEwan could be accused here of opportunism as he’s implementing changes that were already under way across the market. Nationwide did the same just a day earlier, for instance, streamlining its accounts and scrapping introductory bonuses.
And RBS itself had already backed away from preferential online deals when it withdrew some of its e-savings accounts last year.
All of this is another step towards the end of free banking.
It’s instructive perhaps that McEwan failed to mention packaged current accounts, complaints about which are rising rapidly. Once RBS has sorted out the “hollowed-out” insurance benefits that comes with them we’re likely to hear more about changes to those products.
Will RBS blink first on introducing fees across its current accounts? Over in Ireland RBS-owned Ulster Bank has already introduced a ¤4 a month “maintenance fee” on its current accounts that applies unless customers deposit ¤3,000 a month or keep a balance at that level. RBS will doubtless be looking closely at how that has worked out.
Over here it starts with simplification. Or as customers might see it, a canny way of reducing even further the rates paid on savings accounts.
Five years after the base rate hit 0.5 per cent the removal of teasers can be interpreted as a blow for cash savers who were willing to play the game in pursuit of better returns.
A ban on teaser rates is a possibility, with the FCA this summer concluding an investigation into the products. Its chief executive, Martin Wheatley, last year described teasers as the “financial equivalent of the Venus flytrap, enticing consumers towards a product and relying on human inertia to keep them there”.
Such practices have “no place at the new RBS I am building”, said McEwan. He also makes a big play of rewarding customers for their loyalty.
It’s unfortunate, then, that thousands of loyal RBS savers with older Isa accounts recently suffered a big cut in their rate due to the Isa range “simplification”.
Savers previously paid up to 2.25 per cent on the e-Isa or 2 per cent on the Cash Isa Plus were shifted in January to the Instant Access Isa, paying just 1 per cent (rising to 1.5 per cent on balances of £25,000 plus).
As it happens, the blow was softened by a six-month bonus of 0.3 per cent.
RBS customers can look forward to the bank becoming more transparent and boring, if McEwan is right, but some customers will pay a price for their loyalty.