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Britain's best and worst banks

Fraudsters are shoulder-surfing when bank customers use a cash-point

A new poll has revealed which banks should be thoroughly ashamed of themselves when it comes to customer satisfaction. The survey, carried out by Which?, found the big high street banks are still falling seriously short of expectations.

The biannual survey uncovers the best and worst banks based on feedback from members of the public.

The losers

So, which bank has won the notorious accolade of the worst bank in Britain? Bank of Ireland is bottom of the pile with a 41% satisfaction score. It scored just two out of five stars for customer service, regular communication, clarity of statement and branch availability.

Ulster Bank was second bottom, with a score of 45%. The bank, part of the wider Royal Bank of Scotland (RBS) group, was hit by computer problems in March, while there were issues with its mobile apps in March and May.

In terms of the big high street names, Barclays, Halifax/Bank of Scotland, HSBC, Lloyds, NatWest/RBS and Santander all scored below the market average of 62%.

The winners

But while the big banks prove disappointing, it seems smaller online outfits do care about their customers.

Norwich & Peterborough Building Society achieved a satisfaction score of 71%, which means it gains Which? Recommended Provider status for the first time. And, despite its recent corporate woes, the Co-operative Bank scored 73%, perhaps in part due to its ethical corporate stance. Whether it continues to score so highly when it scraps its £15 compensation for poor service in mid-September remains to be seen.

In third place was the One Account which scored 75%. The One Account, which is essentially an offset mortgage combined with your current account and savings, was originally launched by Virgin Money, but is now owned by the Royal Bank of Scotland.

In second place was Smile which is owned by Co-operative Bank. The bank’s ethical stance has clearly stood it in good stead leading to a total score of 78%. Many happy customers have also rated Smile's level of customer service as one of the best.

But the overall winner, for the eight consecutive time, was the HSBC-owned bank First Direct, which scored a grand total of 85%. The bank doesn’t necessarily offer the best products on the market – the 1st Account, for example, now pays 0% on in credit balances, although it does offer a fee- and interest-free £250 overdraft – but it seems its customers are prepared to sacrifice a little interest in return for a great banking experience.

In fact, the online bank has dozens of awards for customer service excellence.

Right now, First Direct is offering a fantastic bonus of £100 to anyone who switches to the 1st Account, although you must pay in at least £1,000 a month and transfer two direct debits or standing orders to qualify.

[Compare the 1st Account with other top current accounts]

Top accounts if you struggle to budget

Meanwhile, the Fairbanking Foundation, a charity whose mission is to improve financial well-being, has received an official stamp of approval for its Fairbanking Marks.

These are “granted in three, four or five star versions based on Fairbanking’s assessment of the level of the financial well-being the product delivers”.

Fairbanking's review process involves an analysis of the product, independent research involving customer who have the product, and a look at the company’s complaints procedure for that product. Finally, the assessors look at the rate and charges on the product.

However, only three current accounts have been deemed worthy of the Marks so far, and they all charge fees, and are only really worth looking at if you're not great at budgeting.

What the accounts offer

The Secure Trust account (rated 4*) comes with no overdraft but also no fees if direct debits and standing orders are rejected. It’s open to all, even if you have a bad credit history and have been made bankrupt.

There’s a monthly management charge of £12.50 and also a one-off account set-up fee of £12.50.

The account offers no debit card. Instead it comes with a prepaid MasterCard that pays cashback of up to 4% at 35 retailers including Asda, Argos, Boots, M&S and Wilkinson. A £5 fee is charged for participating in this scheme at the end of every year you hold the account.

You’ll also be charged 50p for every cash withdrawal made at a UK ATM. However, there are no charges for loading money onto the card.

You can separate money to pay bills from money for everyday spending. The bill money stays in your account while the spending money is loaded onto the card.

Meanwhile the thinkmoney Personal account (rated 4*) costs £14.50 per month, or £21.25 for joint accounts. It also comes with a prepaid debit card with no charges for ATM withdrawals or loading the card.

Money for your bills stays locked in your account, while any that’s left goes onto your prepaid card. You can also get help and support from one of thinkmoney’s Money Managers on the phone.

And there's the Lloyds TSB Classic Account with Control, essentially a paid-for extension of Lloyds’ regular Classic account. The difference is that for £10 a month you won’t pay any fees if you accidentally overspend – that’s the Control bit. Instead, the payment will be cancelled.

However, if the payment is for rent, mortgage or another important bill, the control element means it won’t be paid if it will take you into the red. This could be dangerous if you’re prone to overspending, but also useful if you’re just trying to spend on something non-essential that you just can’t afford.

As with the normal Classic account, you get a Visa debit card. The account also pays 1.50% AER interest if you pay in at least £1,000 a month and stay in credit. Lloyds calls this Vantage.

This could be a useful account if you want a fee-free buffer to stop you from overspending, but it doesn’t eliminate the risk that you might not have the money for an essential payment.

[The banks that give you up to £160 for nothing]