In recent weeks, I’ve come to the conclusion that the UK banking system is in chaos. New technology is great – I just wish that the banks could get it working properly.

On 27 May 2008, APACS, the UK payments association launched its new Faster Payments service. Faster Payments – that sounds good – faster than what? Well, faster than BACS Direct Credit. As I understand it, the Bankers’ Automated Clearing Services (BACS) system is 40 years old and dates back to times when the big clearing banks literally exchanged tapes with outgoing transfers batched up on day 1, sent between banks on day 2, and transferred in to the receiving bank on day 3. For a long time, that’s been the reason that transfers took 3 business days; however in the days of electronic transfers, what has really been happening is that the banks have sat on our money for a few days and earned some interest whilst we wait for it to be moved. When we need to move money quickly (for example, when buying a house), the banks use a system called CHAPS – and customers are charged for it.

According to APACS:

“The Faster Payments Service enables electronic payments, typically made via the Internet or phone, to be processed in hours rather than days.”

It sounds great. My bank is part of the scheme, so is my wife’s bank but the bank where we keep our savings (to get a better interest rate) isn’t so we’re stuck with BACS for a while longer. That’s not so bad, but then I tried to make a payment between two UK banks and the sort code was reported as belonging to as a bank in France. Err, “Non! Ce n’est pas correct”, thought I. So I called Bank A and they told me that I had the wrong sort code for Bank B. When I explained that the same page on the website showed an existing link to another account at Bank A with the same sort code they acknowledged that there was a problem and asked me to try again the next day.

It worked the next day and I put it down to an isolated incident but then I tried to make a payment from my account (at Bank B) to my wife’s account at Bank C. Both banks are part of the Faster Payments scheme. And Bank B wouldn’t let me pay money to Bank C because they said I had the wrong sort code. When I explained that I didn’t and that I was reading the details from my wife’s bank card and statement they said there was nothing they could do about it as Faster Payments doesn’t let them override incorrect details and that I’d need to get my wife to call Bank C (why? what could they do about problems with Bank B’s systems?). I guess I could always write a cheque! So much for Faster Payments!

The next day I was in town and, after making a purchase at the Apple Store in Milton Keynes, I needed some change to pay for car parking. One of their staff, “Bill”, who was clearly not employed for his social skills said that they could not help. So I went to the bank. This particular branch of HSBC has no counter staff but does have a few people standing around next to a line of machines where people can interact with the bank’s computers and withdraw/deposit funds. Very 21st century. Or it would be if it didn’t need so many staff to show people how to use the machines. One of those machines is supposed to issue coins in exchange for notes but it was not working. So I asked if the bank staff could change a £10 for some coins. No – the staff don’t have access to any money. After all, it’s only a branch of one of the UK’s largest banks…

Thankfully the staff in the nearby Gap store (where I didn’t buy anything – I just explained the situation and asked for help) were more than happy to open the till and change my tenner… then, as I passed the Apple Store, Bill asked if I had got my money and I said “Yes, thank you. No thanks to the Apple Store.”, to which he replied “woooooooooo!!!” (how very professional…).

So, it seems that Faster Payments don’t work. And that my bank can’t change notes for coins because the machines have taken over. First Direct also wants me to switch to paperless billing but the statements I can download from their Internet banking service are in formats that are pretty useless for local storage (only American Express seem to have a clue on how that should work – with 6 months of statements available for immediate download in PDF format and all others available from archive on request). Add to that the excessive bank charges, the fact that they seem to have totally lost their way on the customer service front (although at least their call centres are in the UK) and that none of the banks seem to be able to get their heads around secure logon for their Internet banking sites and it seems to me that the whole industry is a mess.