Most of us know someone who has experienced poor administration at a bank or other financial institution. But you don’t expect your bank to make changes to your financial arrangements without telling you.

But this is what happened to one FT reader. The reader in question has been a current account customer with NatWest since his student days and has lived at the same address for almost 10 years.

In January 2000 he also took out home contents insurance with NatWest and paid for the monthly premiums by direct debit.

He happily believed his home contents were fully covered. But a closer look at his current account revealed that NatWest had stopped taking his direct debits. When he called his bank to check what was going on he was told that his contents insurance policy had been cancelled as earlier correspondence to his home address from the bank’s insurance arm had been returned by the Post Office. The Post Office had apparently advised NatWest that their customer had gone away.

The result was that our reader’s home contents were uninsured for several months. NatWest has now reinstated cover and offered our reader £50 as a gesture of goodwill.

But it is worrying that a bank can cancel a policy without getting in touch with the insured. In this case, NatWest admits that, despite having the insured’s telephone details, it failed to check whether he was still living at the same address. Had it also looked at his current account details it would have also seen that his home address information remained the same.

This case highlights one of the perennial issues of occasional poor service at banks. It also highlights how many banks have outdated IT systems that do not talk to each other, making it difficult to cross-check information. In many cases banks do not have one IT system that tells them all the funds, accounts and insurance policies that customers have with the same institution. This also explains why customers often receive marketing literature promoting personal loans even if they have savings accounts flush with cash with the same bank.

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