Premier bank accounts

Banks sell these accounts to customers claiming they provide an ‘all in’ package for busy people, together with a named member of staff (‘your relationship manager’) whom you can contact for financial and tax advice. Most of these accounts require you to make a minimum monthly deposit of typically £500-£1,000.

The incentives offered with premier bank accounts are not always of great value and the monthly fees can sometimes exceed the value of the benefits provided.

So unless you want your ego massaged by the thought of having a relationship manager and being labelled a ‘mass affluent customer,’ it may not be worth the £10-15 monthly fee.

That being said, some customers like the idea of having a relationship manager to whom they can turn to for advice and to have someone who can help with financial emergencies. For instance, if you need a personal loan arranged quickly, you may be able to get this turned around more quickly if you are premier bank account holder than if you are a standard bank customer.

Premier account interest on credit balances – premier bank accounts tend to pay a reasonable rate of interest on at least part of your credit balance but terms and conditions vary widely.

Premier account interest on overdrafts – a number of premier bank accounts provide an interest-free overdraft of typically £100-£250 and a range of authorised overdraft rates thereafter.

Pros and cons of premier bank accounts

Critics of premier accounts say they pander to customers’ vanity in that they aim make you feel special, but offer little by way of real financial benefit.

If you assess the true value of the incentives on offer, they can amount to very little, and once you have taken the monthly fees into account, you may be better off sticking with one of your bank’s standard accounts.

Generally speaking, it is not worth switching but if the extras on offer are of value to you, or you want a relationship manager for help with your financial affairs, it may be worthwhile.

Other private bank accounts

Private banking is big business for the banking industry and most banks offer some form of premier/gold/private banking service to their wealthier customers.

Most of the investment banks offer private banking services as well. These are usually wealth management offerings whereby the bank will manage your money (usually £100,000 minimum), using external fund managers, as well as their own internal funds. These banks rely on client referrals by stockbrokers, IFAs and SIPP providers. There are also niche private banks for the super wealthy.

As well as offering normal banking and wealth management services, these niche private banks provide share dealing and custody services, trust and tax advice, succession planning, foreign exchange and even help with domestic issues.

Private banks are naturally coy about discussing fees. But wealth management services are generally charged on an ad valorem basis (as a percentage of the funds under management, typically 1-2% a year, depending on the size and nature of your portfolio), while advice is charged on a time/cost basis.

Protection

All UK banks are encouraged to subscribe to the Banking Code of Practice, which sets out minimum standards in banks’ dealings with their customers and prospective customers.

All banks operating in the UK are required to be authorised by the Financial Services Authority and most subscribe to the Financial Ombudsman Service (FOS). The latter has the power to order banks to pay redress of up to £100,000 in compensation.

If you have a complaint:

• Keep a copy of all relevant paperwork and notes of telephone conversations;
• Write to your relationship manager at the bank setting out your complaint, referring to the banking code, where appropriate;
• Remember that the bank has eight weeks in which to resolve the dispute;
• If unresolved you can apply to the FOS, which runs a free-of-charge complaints handling service.

Compensation cover

UK authorised banks are covered by the Financial Services Compensation Scheme, which will pay up to £50,000 in compensation per account, per regulated brand, in the event that a UK authorised bank becomes insolvent. Check the FSA website for details of your bank’s FSA authorisation.