, 12:25, Wednesday 15 June 2011
A charity set up to judge whether banks' offerings contribute to customers' "financial wellbeing" has found just four products worthy of accreditation.
The Fairbanking Foundation will award products with three, four, or five stars, depending on how much they allow their customers to control their finances and incentivise them to reduce debt.
However, director Anthony Elliott said that after an initial trawl of the entire market, the charity had asked only a handful of banks and building societies to apply for a Fairbanking Mark, and that just four had made the minimum, three-star grade.
These include just one account from a major high street bank - a product called Your Savings Goal, from RBS and NatWest. The other three products come from smaller providers, Saffron Building Society, Secure Trust and Thinkbanking.
Mr Elliott said that because even these products had only been given three star ratings they also had motivation to improve. "Like standards for car safety, Fairbanking Marks will serve to provide clarity as to which products are the most helpful and over time will drive up standards as these measures become an increasingly significant part of competition," he said.
These products do not necessarily have the best interest rates, instead they are assessed on whether they inform the customer of their account balance on regular bases, and show them where their money is being spent. It also assesses whether customers can use the product to set a realistic budget.
A spokesman for Fairbank said that one of the providers had made a change to its bank statementing processes in order to receive the mark, and that he hoped others would do the same. "Financial wellbeing is not about how much money you have, it is also about how in control of it you are," he said. "Someone living in a council house could have better financial wellbeing than a millionaire."
How do the four products that have been given the FairBanking Mark stack up?
You certainly won't find them in the Best Buy tables for top interest rates, but the charity believes that they have other merits that customers will appreciate.
1.RBS/NatWest Your Savings Goal
This is not a specific savings account, rather a tool that can be used with any of the banks' savings products to help you to save for objectives such as a car, a holiday or a wedding. It gained its three star rating because you can set up one or more personalised savings pots, find out how much you need to save and for how long, and easily see how you savings are progressing.
The company's savings accounts are not currently market leading. If you want an instant access saver, the best that RBS can offer is 1.5pc including bonus, while its one year bond pays 3pc. You may be saving towards your goal, but your money will be decreasing in value at the current rate of inflation.
"Since introducing the tool we've seen our customers' savings behaviour change for the better, so we're thrilled that an independent body has recognised what a fantastic saving resource it is," said Phil Sheehy, RBS Head of Savings.
2. Saffron Building Society's Goal Saver
This is a bank account without a market leading rate, currently paying 2.25pc a year. It has been awarded the Fairbanking mark because it allows you to work out how much you need to save for specific events and then use the society's plan to work out how much you can afford to save. The interest rate is monitored to remain within the best 10 online accounts published on Moneyfacts, which will provide some comfort for those who do not regularly switch their savings.
3.Secure Trust Bank Current Account
Secure Trust is a UK listed bank, part of the Arbuthnot Banking Group listed on AIM. Like other UK banks it is regulated by the FSA and part of the Financial Compensation Scheme.
The current account has a steep £12.50 a month fee, but boasts that it will accept everyone. It comes with a prepaid Mastercard, which you need to transfer money to every time you run out. However, the account has no bank charges or fees for bounced Direct Debits or standing orders, which may make it better value for those who routinely find themselves paying expensive charges
Fairbanking likes the account because you can set an overall budget and keep money separate, and see how your spending changes over time.
4.ThinkBanking's current account
ThinkBanking is another smaller business that many people may not have heard of. Its current account is held with Royal Bank of Scotland, but managed and provided by Think Banking, based in Salford. The current account automatically sets aside the amount of money you need to pay your bills and then puts the rest into a card account, where you can access the funds to spend, preventing you from going overdrawn. The account does not charge unauthorised overdraft fees and is available to those with a poor credit history.
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