James Daley

By James Daley

Every company likes to be able to say that they've got happy customers. And the truth is that satisfaction with banks and insurers is not nearly as bad as you might think it would be.

But just how confident can you be that happy customers are the sign of a brand that offers good products and services? In short, the answer is: not very.

When it comes to buying your groceries from the local supermarket, customers are well placed to make a judgment about whether the service is any good. They almost certainly visit shops many times every week, and they've got a good idea what represents a good retail experience and what doesn't.

But when it comes to financial services, people often have very few engagements with their bank or insurer. Most people want to get the purchase of their car insurance out of the way as soon as possible, and hope that they never have to call the insurance company again. And when it come to banking, increasing numbers manage their affairs online, and feel that any personal interaction in their bank is an inconvenience. So good service in banking may be represented by simply having good online banking facilities that are easy to use and don't let you down.

Blissful ignorance?

In a world where happiness is about not talking to your bank or insurer, it's easy to understand how some customers may be happy without knowing that they're actually getting a bad deal. It's possible to be mis-sold an investment and go to your grave happy with the product and the returns you got. If you'd realised that the charges were twice the going rate, and that your investment performed 50% as well as others on the market, you might be less happy.

Don't get me wrong, I'm certainly not making the case that most people have no idea whether or not they have cause to be happy with their financial provider. But I do think that when it comes to banks and insurers, customer satisfaction scores have a greater potential to disguise bad value.

Some of the brands that have high customer satisfaction scores in our tables have products that, to my mind, are not great value. I've never been much of a fan of Marks & Spencer's bank accounts, for example. Travel insurance plus lots of vouchers for tea at the M&S cafe never struck me as great value for £17.50 a month. I'm simplifying it a bit, but the portfolio of benefits don't look great compared to come of the other new packaged accounts on the market, and I'm skeptical about whether M&S banking customers couldn't have got much better value elsewhere - something that they're probably not aware of.

Nevertheless, M&S is clearly doing something right if it can score so much better than most other banks when it comes to customer happiness.

Getting the whole picture

To get closer to understanding how good a company really is, we decided to also look at customers' perceptions of trust, as well as companies' complaints record and a measure of how transparent they are.

Hopefully, what comes through in our final ratings is a balance. It's quite clear that M&S Bank customers are very happy. But the company as a whole could do better when it comes to handling complaints, and could try harder when it comes to putting its terms and conditions in plain English and keeping them to a length which is manageable for their customers.

Overall, they're one of our bronze rated providers - which means that they're definitely worth considering. But some of their competitors, such as Nationwide, have a better record across the board, so if you don't goto the M&S cafe multiple times a week, they may be better for you.

Having happy customers is a great achievement. But it's only half the picture.