Bank of Scotland receives most complaints – again

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The Bank of Scotland remains the most complained about financial business in the UK, according to the complaints watchdog.

In the first six months of 2017 the Financial Ombudsman said it dealt with 20,541 complaints about the firm – part of the Lloyds Banking Group.

However only 22% of those complaints were upheld.

The vast majority of the complaints about the Bank of Scotland – 83%- concerned its sales of PPI insurance. Meanwhile PPI complaints once again topped the table of consumer concerns, with a 14% rise in complaints to the Financial Ombudsman in the first half of the year, compared to the last six months of 2016. In total the Financial Ombudsman Service received 89,513 PPI complaints, up from 78,375 in the previous period.

Increasing workload

Bank of Scotland was also the most complained-about financial firm in the last six months of 2016. The latest figures put Lloyds Bank in second place. The bank was the subject of more than 18,000 complaints, but more of these – 37% – were upheld.

The group has so far put aside £18bn to compensate customers who were mis-sold PPI. Last month the Financial Conduct Authority ruled that all PPI claims will have to be lodged by 29 August 2019. That is likely to lead to a further rise in complaints, as claims management firms seek to capitalise on the deadline.

“While we still don’t know what impact this will have on our workload, today’s data shows that PPI complaints are already increasing,” said Caroline Wayman, chief executive of the Financial Ombudsman Service. The peak for the number of complaints about PPI was in 2013/14, when the Ombudsman received nearly 400,000 referrals. The Ombudsman also received over 15,000 complaints about Barclays, the highest number for issues to do with banking or credit.

Lloyds Bank, Bank of Scotland and Halifax to scrap charges for unplanned overdrafts

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 Lloyds Banking Group is to launch a simplified “pay-as-you-go” overdraft charging system and scrap some fees, in a shake-up affecting millions of customers.

The UK’s largest current account provider, with over 20 million personal current account customers, said more than nine in 10 of those with its brands Lloyds Bank, Bank of Scotland and Halifax will be left either better off or in the same position financially.

Starting in November, customers will be charged a single rate of 1p per day for every £7 of planned overdraft usage. A fee will be charged at the end of each day of planned overdraft usage, which Lloyds said would help customers to budget, rather than being hit with a bigger bill weeks later.

All fees and charges associated with unplanned overdrafts will be removed. Lloyds is writing to customers to tell them how they will be affected. The less than one in 10 who will be worse off will receive extra support, which could prompt them to consider a more cost-effective way of borrowing.

This may include reviewing alternative options, such as a personal loan. Those who may be worse off are particularly likely to have large overdrafts which they consistently max out for long periods. Lloyds said the average debit balance for a customer using their overdraft is £450 in a month. A Lloyds Bank Classic current account customer using £450 of a planned £1,000 overdraft limit for seven days would currently pay £7.49.

But under the new system they would pay £4.48. A Halifax Reward customer who goes overdrawn by up to their planned £100 limit for 10 days and also goes into an unplanned overdraft by £50 for two of those days will be charged £1.40 under the new system. Previously they would have been charged £18.

The bank expects to make less money overall from overdrafts as a result of the moves, but declined to specify amounts. It is also automatically opting customers into receiving free text alerts, to help them stay on top of their accounts.

People who do not want texts can opt out. Lloyds Banking Group’s changes will also mean that, from November, customers will no longer be charged a “returned item fee” for having payments stopped due to a lack of funds.

Greg Coughlan, the bank’s director of personal current accounts and payments, told the Press Association: “We want to put customers in control so that they can better manage their day-to-day finances” with “pay-as-you-go” daily charging.

He continued: “We think more customers will be able to use their overdraft in a smarter way.” Mr Coughlan said that while the banking group expects to see its overall income from overdrafts reduced: “We’re convinced we will have better relationships with our customers as a result of the change.”

He said that for the vast majority of customers, the charges under the new system would only be “pennies a day”. Vim Maru, group director, customer products and marketing, Lloyds Banking Group, said: “When asked about our new approach, over 80% of customers said that they preferred it compared to the current charging format.” An investigation by Which? into unarranged overdraft fees found some can potentially cost more than a payday loan.

The Competition and Markets Authority (CMA) previously said that in 2014, £1.2 billion of banks’ revenues came from unarranged overdrafts. The Financial Conduct Authority (FCA) is currently putting the high-cost credit sector under the spotlight, including overdrafts. Peter Vicary-Smith, Which? chief executive, said Lloyds’ decision is a “positive step”.

He said: “The Financial Conduct Authority must now use its review of high-cost, short-term credit to ensure other banks follow suit, restricting unarranged overdraft charges to the same level as for arranged overdrafts.

” Andrew Hagger, founder of, said Lloyds had taken a “fairly radical move” and predicted more banks would be reviewing their overdraft charges. Mr Hagger said Lloyds’ new tariff works out cheaper for customers with smaller borrowing requirements.

But for those borrowing sums in four figures it starts to get more expensive, he said – for example a £2,000 overdraft for 12 days currently costs a Club Lloyds customer £17.47 but under the new tariff it is £34.29. Mike O’Connor, chief executive of StepChange Debt Charity, said around half of its clients have struggled with overdraft debt.

He said: “This looks a positive step forward, but there is a need to monitor what happens next, not least for the questions this announcement poses for the overdraft market as a whole.”



Lloyds Bank to shrink hundreds of branches in size

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Lloyds Bank has announced plans to shrink hundreds of its branches in size, in some cases boarding up the old counter sections.

The new “micro branches” will be staffed by just two people, who will help customers to use machines, including pay-in devices. Some of those being converted will be Halifax and Bank of Scotland branches. Lloyds said the reason was “a profound change in customer behaviour”, which has seen more transactions move online.

It has already announced plans to close 400 of its branches around the UK, with 9,000 job losses. The micro format, modelled on an existing branch in Paternoster Square in the City of London, will use as little as 1,000 square feet of space. “We have a lot of branches that used to have a lot of footfall, and therefore feel quite empty and intimidating for customers,” said Jakob Pfaudler, Lloyds’ chief operating officer for retail. “So when there’s too much space we may board up places in existing branches.”

‘Apple store’

There will be no counters in the new micro branches. Instead the staff will be mobile, and will carry tablet computers to help customers.

Other banks have already made similar changes.

There will be video links for customers to talk to mortgage advisers, but for complex transactions they will have to visit a bigger branch. As part of the changes Lloyds will also open up to 20 much larger banking centres, which will have a full range of facilities, including sections for entrepreneurs. “Think Apple store, as opposed to bank branches,” said Mr Pfaudler. The first, a Lloyds branch, will open in the centre of Manchester this year. That will be followed by a flagship Halifax branch in central London.

Medium-sized existing branches will be re-designated as “community” branches – in rural areas – or “anchor” branches in towns and cities. The bank is also introducing three more mobile vans over the next few weeks, in South Wales, Devon and Gloucestershire.

Map of bank closures per capita

By the end of this year Lloyds will be left with about 1,950 branches around the UK, meaning it will still have the largest network of any High Street bank. Research by Which? suggested that in total more than a thousand branchesclosed in the UK in the two years to December 2016. Last month, RBS and NatWest announced that 158 further branches would close, while HSBC is planning to shut 62 branches this year.

Lloyds bank accounts targeted in huge cybercrime attack

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Lloyds Banking Group suffered an online attack lasting two days as cybercriminals attempted to block access to 20m UK accounts.

The denial of service attack ran for two days from Wednesday 11 January to Friday 13 January, as Lloyds, Halifax and Bank of Scotland were bombarded with millions of fake requests, designed to grind the group’s systems to a halt. Usually in a denial of service (DOS) attack, the criminals demand a large ransom, to be paid in bitcoins, to end the onslaught. However, no accounts were hacked or compromised during the attack, and Lloyds did not pay a ransom.

In a cat-and-mouse game across the planet, IT security experts at Lloyds “geo-blocked” the source of the attack. This effectively drops a portcullis over the server launching the attacks, but also stops legitimate customer requests from that area too. The cybercriminals then move to another server, and the geo-blocking game begins again. It explains the intermittent nature of the service issues at Lloyds during the period of the attack, with some customers complaining that they could not log on, but most experiencing normal service.

Lloyds declined to comment on the specific nature of the attack. In a statement, it said: “We experienced intermittent service issues with internet banking between Wednesday morning and Friday afternoon the week before last and are sorry for any inconvenience caused. “We had a normal service in place for the vast majority of this period and only a small number of customers experienced problems. In most cases if customers attempted another log-in they were able to access their accounts. “We will not speculate on the cause of these intermittent issues.”

Andrew Tyrie, chair of the House of Commons Treasury select committee, called for the financial services industry to create a single point of responsibility to tackle cyber risks. In a statement issued on Monday, he said: “As millions of customers are exposed to the risks of cybercrime, a higher level of scrutiny and accountability for existing arrangements is needed.” The incident comes just months after a far more serious cyber-heist against Tesco Bank, when criminals launched an “unprecedented” online attack that resulted in the loss of £2.5m from 9,000 accounts. Several other major British banks have been hit by service outages over the past two years when their systems were flooded with fake requests. In January last year, HSBC’s internet banking facility was made unavailable following a DOS attack, but no transactions were affected.

In 2015, RBS revealed it suffered a cyber-attack on its online services that left customers struggling to log on for nearly an hour – just as monthly pay cheques were arriving in accounts. The threat to Britain’s financial infrastructure from persistent cyber-attacks was partly behind the pledge by the chancellor, Philip Hammond, in November to spend an extra £1.9bn protecting UK online defences. Outdated computer systems are allowing malicious hackers to target everyone from companies at board level to individuals in their living rooms, according to the chancellor.

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