High street banks are failing Scottish charities

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Complaints flood in of poor service at high street banks, which don't value third sector customers

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13th May 2015 by Paul Cardwell 0 Comments

Scottish charities have slammed the high-street banking industry saying it does not understand the needs of the third sector.

In a TFN investigation of banking habits, high street banks were rated significantly lower than third sector specialist banks such as Triodos Bank, Unity Trust Bank and CAF Bank.

Almost two in three charities said they were disappointed with the service provided by their high street banks, including RBS, Bank of Scotland, Clydesdale Bank, the Co-op Bank and Santander.

Of those unhappy, around half said they have experienced poor customer service and complained that their bank doesn’t value third sector organisations as proper customers.

The biggest problems arise from the process of opening accounts and changing signatories. Too often processes are too slow or unworkable for charities.

There is a huge misunderstanding of how charities work. They think it’s like a normal business but misunderstand the financial governance involved

One Scottish branch of an international education charity told TFN it had to move banks because of the hassle involved.

It said: “The bank we previously used required you to be present to change the signatories – this meant time off work for all signatories.

“It took almost a year to get this done, by that time we were due to change the committee again.

“As an international organisation, we can say the only country that appears to have this problem is the UK.”

A representative from a national health charity, said: “We require endless mandates signed to change signatories in local projects. These all need director sign off, which with charities is hugely inconvenient as they are all volunteers.”

Further complaints included poor access to cash, overcharging on fees, unfriendly staff and a lack of knowledge about charity finance.

One smaller sized local charity said: “There is a huge misunderstanding of how charities work. They think it’s like a normal business but misunderstand the financial governance involved.”

Another added: “We find that our bank does not understand our business and has made no attempt to do so.

Top 5 banking complaints 

1.Changing bank account signatories 

2.Opening a charity account 

3.Poor customer service 

4.Online banking 

5.Lost signatory documents 

“We are in the corporate banking department and they have no concept of not for profit organisations.”

Despite concerns with high street banks only one in five of the charities said they are considering moving.

Some said they wanted to change banks but felt their hands were tied due to the full range of services offered by high street banks, including local branches.

Others said they didn’t feel that the upheaval and extra paperwork would be worth it as they believed the same problems would still exist regardless of who they bank with.

However, one charity who did change from a high street bank to a specialist third sector bank, in this case Triodos, urged other to do the same.

It told TFN it previously had problems opening up new accounts, something it is often required to do, and the process could take up to six months but now it can be done simply by sending an email.

It added: “We were thoroughly dissatisfied with the service that we were being given and were not treated in a professional manner for a charity which can have millions of pounds going through the bank in any one year.”

Martin Sime, the chief executive of the Scottish Council for Voluntary Organisations, called for high street banks to improve their service to charities.

“We’ve been hearing for some time that high street banks aren’t geared up to meet the needs of Scottish charities and voluntary organisations.

“These organisation are the backbone of Scottish communities and help make Scotland a better place for all of us to live in. They also have a turnover of nearly £5bn a year, making them a significant contributor to the Scottish economy.

“Banks need to wake up to the needs of third sector organisations and start offering them the services and support that they need.”

He also urged charities to consider switching to a different bank that better suits their needs.

See the print edition of Third Force News on 15 May2015 for the TFN and SCVO charity bank account comparison table, which gives an overview of the main charity accounts offered by both high-street and specialist banks.

Banking is the bane of my life

Stephanie Fraser
Stephanie Fraser, Bobath Scotland

Stephanie Fraser, chief executive of cerebral palsy charity Bobath Scotland, told TFN that its bank, the Bank of Scotland, is fine for day-to-day activities but it has been a “complete nightmare” when it comes to anything more difficult.

“I spend a ridiculous amount of time doing banking,” she said. “We have had to change our authorised signatories and all I can say is the Bank of Scotland could not have made my life more difficult.

“They keep sending me back my form saying it is wrong.” 

Fraser would like to be able to visit a branch and get a member of staff to make sure it is right, but this isn't an option.

“They keep saying I have to talk to my bank relationship manager but I don’t know who that is,” she continued.

“I’d love a business manager but I have to ring up an 0845 number and I’m talk to a different person every single time. 

“I’ve had employees leave who have company credit cards and I’ve informed the bank they have left and I’m cancelling the credit card but they’re still send me an annual membership fee.

“The problem is you don’t know whether to ring up the credit card company or your bank relationship manager – who you have no relationship with.”

Bobath is currently examining the possibility of becoming a Scottish Charitable Incorporated Organisation (SCIO) but banking issues are holding that up.

“We haven’t got there yet but it’s nothing to do with our constitution, OSCR or the idea of being a SCIO,” she said.

“It’s simply because I need to be able to run my business on a day-to-day basis and if the bank isn’t able to change signatories how will it cope with a change to our legal status.”

Not all banks are the same though. Bobath also has an account with Clydesdale Bank and has no problems.

Fraser added she has considered closing the Bank of Scotland account but is worried about losing donors.

She said: “Historically regular givers use standing orders and we have accounts these are paid in to.

“No charity wants to shut down accounts that receive standing orders as you don’t want to upset regular donors by changing your bank account.”A Bank of Scotland said:

“We are sorry for the issues Bobath Scotland has experienced in managing its banking facilities and apologise for any inconvenience caused. The changes to signatories requested by the charity have now been processed and taken effect.”