In the wake of the new coalition government's statement that it intends to end 'unfair' bank charges, reopening a case that the OFT has already lost, and the FSA saying that it wants to take action to improve the way banks handle customer complaints, Eric Leenders, executive director, retail banking, at the British Bankers' Association (BBA), comes out fighting arguing that numerous initiatives are already underway and that competitive pressures are transforming the sector anyway

The High Street will never look the same again. A number of well-resourced new entrants are promising to open up new bank branches across Britain in the coming months, and the Post Office promises to ramp up its current offerings. All of this is likely to be good news for bank customers - even those who stay with their current bank. Competition is essential to any commercial market, and banking is no different in this respect to any other business. It is also of benefit to the UK government, of course, as those new signs on the High Street provide physical evidence that the promised shake-up in banking is taking effect.

An assumption has grown up recently, certainly in public policy circles, that bank customers are generally unhappy with their lot. All parties campaigned on this issue during the recent election battle but is there any basis for this belief? Just before Easter, the BBC was surprised to learn that a poll it had commissioned on banking showed 93 per cent of people were in fact satisfied with their bank. It was less of a surprise to us at the BBA than it was to them: although the reputation of banking as a business is admittedly low, we know the individual relationship between a customer and his or her bank is still comparatively strong.

This is where the banks have been investing, supporting their brand via advertising, sponsorship and better customer service with longer opening hours and so forth. Over the past two years banks have been asking customers what they really want, and applying the lessons they've learned. For instance, well in advance of the Supreme Court decision on fees for exceeding overdraft limits, individual banks had created new accounts and new tariffs for customers likely to breach their agreements. Put simply, these fees had been competed down. The same is happening in other services as banks compete for customers.

But it is when customers complain that the relationship with their bank is seriously tested. The Financial Services Authority recently reported that it found serious failing with complaints handling at five banks, and was taking action.

Well so are we. The BBA is working with the regulatory authorities to better understand the cause of this rise in complaints and to resolve the issues. We have already hosted the first of a series of seminars bringing together senior industry figures with the regulators to discuss the issues and share best practice. We are also working harder at ensuring people in financial difficulties get the help they need. For instance, we have worked with the free debt advice agencies to create checklists to accompany Common Financial Statements. These are the standard forms, developed with advice agencies, to help people in financial difficulties to manage their budgets and repay what they can of their debts.

Recently more evidence came to light of about the nature of complaints against the industry. The annual review of the Financial Ombudsman Service appeared in mid-May and, as always, contained masses of valuable intelligence about the nature of complaints from unhappy customers. The media mostly focused on the fact that complaints against banks had risen by 38 per cent, and therefore missed the more important story a little more analysis would have uncovered. There were more than 25,000 complaints about current accounts, and a growing number of these came from bank customers whose problems related to financial hardship. The Ombudsman cites the Supreme Court ruling on unarranged overdrafts as one of the reasons for this growth in complaints, but it is clear we need to focus on how we deal with people in difficulties, particularly as the effects of the global downturn are being felt more widely. This is what the BBA will be investigating with members in the coming months, determining the real causes behind customers' complaints and sharing experiences and practices to ensure complaints always reach a fair resolution.

Remember, banking is a huge industry, handling more than 150 million personal accounts, with 50,000 people at ATMs and 40,000 online, at any given time. So although the Ombudsman received 925,095 initial enquiries and complaints last year, only one in six of these - 163,212 in total - resulted in new cases. And banking and credit accounted for some 44 per cent of these new cases; that's 71,700. And of the banking cases resolved last year, 52 per cent found in favour of the customer. Behind the bank bashing headlines, there is a massive industry working with quiet and unremarked efficiency, which is only ever revealed to the public at large when something goes wrong.

It will be down to the new government to work with the industry to shape the future of banking. We look forward to working constructively with them, and we hope that the principles of fair and open competition ensure the coming changes to retail banking are all changes for the better.

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