Banks and building societies receive more than two million complaints from customers a year after blunders ranging from miscalculated interest to lost Isas and wrongly bounced direct debits.
Now the Financial Services Authority is determined that banks should be held to account. Last week the Royal Bank of Scotland group, which includes NatWest, was fined £2.8m for failing to deal with customer complaints fairly.
But this is just the tip of the iceberg. When the regulator reviewed the way the industry approached customer complaints, it found that five of the biggest banking groups were failing to meet obligations. Here are the top 10 banking bungles and how to avoid them.
1 INABILITY TO CARRY OUT SIMPLE INSTRUCTIONS
Once you have given an instruction to your bank, never take it for granted that it will be carried out. Look at statements to ensure that everything is proceeding as you ordered. Random blunders are particularly common when opening an account or transferring from another bank.
Action: Always give instructions to your bank in writing, by letter or email, and keep all correspondence. If an instruction is not carried out, complain immediately.
2 DIRECT DEBIT BUNGLES
If you set up a direct debit to pay regular bills, such as utilities, credit cards, or school fees, you give a third party the right to take money out of your account, until you tell the bank to stop.
However, customers should be protected against mistakes either by their own bank or the merchant's bank under the Direct Debit Guarantee Scheme.
Action: Do not be fobbed off with excuses, such as "you have to go back to the originating company" or "you need to give a month's notice to cancel your direct debit". If you suffer any loss or penalty because of a direct debit mix up, your bank must compensate you.
3 CARDS CANCELLED WHILE YOU ARE ABROAD
It can be infuriating when off on a holiday of a lifetime to find your cards have been cancelled, leaving you penniless, but banks routinely cancel cards used in exotic locations because of the risk of fraud.
Action: Notify your bank in advance of the trip, but also give it your mobile phone number and take the phone with you. This way it can contact you before cancelling.
4 MISCALCULATION OF INTEREST
You need to be a maths professor to calculate the interest due on credit cards, overdrafts and mortgages, but customers should run a "reality check" eye over their repayments to make sure they look reasonable.
Action: The Financial Ombudsman takes the view that where an error was the fault of an institution, and the customer cannot have been expected to spot it, then the bank or building society must bear the loss up to the date of the complaint.
5 CLEARING ISSUES
Banks have been working to speed up the clearing cycle, so under the faster payments system electronic transfers should be completed within two hours. However, not all payments qualify for faster transmission. This is not always spelt out to customers, who can be hugely inconvenienced when transactions take, say, five days to clear, when they were expecting to have use of the money within hours.
Action: Banks have different limits for faster payment by phone or internet, so don't take it for granted that a transaction will go through quickly.
While the limit at Barclays is £10,000, it is £300 at the Santander group, £1,000 at Nationwide and £2,500 at the Co-op. Ask your bank in writing for full details of the clearing cycle. A useful description of how the faster payment system works can be found at www.chapsco.co.uk.
If you are told a payment will be cleared within a certain time, you relied on that information, but subsequently incurred a loss because that did not happen, then you should ask the bank to reimburse any charges or other expenses incurred.
6 DENYING CONSUMER CREDIT PROTECTIONS
If you have a complaint against a retailer for an item bought on a credit card for at least £100 and less than £30,000, you can ask your credit card company for compensation.
However, customers are routinely instructed to pursue the retailer first.
Action: Do not be fobbed off. You are entitled to complain first to the credit card company. Insist your provider investigate your complaint
7 DISPUTED TRANSACTIONS
Customers can find themselves at loggerheads with banks when rogue transactions appear on their statements which the bank claims they were responsible for and they know they weren't.
Action: Check statements regularly, preferably daily. If any rogue entries appear, complain immediately. Stick to your guns, if you know this item does not relate to you. Pursue the complaint to the Ombudsman if the bank digs in its heels.
8 PROBLEMS WITH PINS ON NEW CARDS
If you require a new card, perhaps because it was accidentally put in with the washing, you do not necessarily require a new personal identification number (PIN). But most customers usually get one automatically. There can then be problems activating the new PIN, while other customers are annoyed that they have to learn a new number.
Action: When ordering a new card, ask the operator what the PIN options are and stipulate that you want to keep your old PIN where possible.
9 CONTINUOUS PAYMENT AUTHORITY
This is an authority normally involving a debit or credit card, which allows a third party to take money from customers on a continuous basis until the company itself issues an instruction to the card issuer to stop.
It is easy to tick a box signing up for one of these on various internet services without realising you have done so. Consumers then find it impossible to stop the arrangement. Unfortunately, unlike direct debits, these transactions are not subject to any guarantee. The customer has no right to ask its bank to stop making the payments.
Action: Read everything carefully, particularly on the internet, before agreeing to make payments and never tick a continuous payment box.
10 ISA TRANSFER DELAYS
With interest on many Isas pitifully low, it makes sense to actively switch accounts to maximise returns. But banks seem to put obstacles in the path.
Consumer Focus last year launched a super complaint after its research revealed that a third of cash Isa switches took longer than five weeks, with only one in 10 transferred within a fortnight. Meanwhile, customers can be missing out on significant interest.
Action: After the super complaint, banks undertook to guarantee that transfers would be completed within 15 working days. If your transfer takes longer, complain and ask to be compensated for loss of interest.
