RBS boss defends teaser rate ban

http://www.bbc.co.uk/news/business-33910571

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The boss of retail banking at RBS and NatWest has defended his banks' decision to get rid of promotional rates on their financial products.

Since 2014, RBS and NatWest have not used so-called teaser rates on savings accounts.

These introductory bonuses boost the interest received in the first 12 months after an account is opened.

The bank has argued that these rates make accounts difficult for customers to compare when shopping around.

'No help'

Les Matheson, chief executive of personal and business Banking at RBS and NatWest, told BBC Radio 4's You & Yours that such rates did not help customers.

He said people found them difficult to understand and to compare. People often forgot to switch accounts once the bonus rate had expired.

Last year, the bank also stopped offering 0% periods on its credit cards, during which cardholders pay no interest on their balance. Once the 0% period ends, cardholders will pay a higher interest rate - at the moment, often about 18.9% APR on their purchases.

Criticising the offering of other High Street banks, Mr Matheson said they relied on customers paying the higher rate of interest.

"We don't think that's a good way for people to manage their finances, so we've stopped doing that," he said.

Closures

The regulator, the Financial Conduct Authority (FCA), is currently reviewing rules on teaser rates for savings accounts, but has said it will not ban them. Mr Matheson said he agreed with FCA proposals to remind customers when a bonus period was about to end, but argued the proposals did not go far enough.

RBS and Natwest offer 0.5% interest on all their savings accounts. He admitted that the rate was not very high, but insisted it was more than some customers received elsewhere.

"Rather than people having to continually switch, let's just give them a fair everyday rate," he said.

Mr Matheson also defended the 100 branch closures planned by RBS and NatWest this year. He said that in some cases, only six people had been regularly going into a branch.

He pointed to an arrangement with the Post Office that allows customers to access banking services and mobile banks that will move between locations.

"If you actually look at the number of access points that a customer has, they are far, far, more today than five years ago," he said.