It's not IF but when as bank keeps its customers waiting

The pros and cons of an internet operation

As Intelligent Finance (IF) celebrated its second birthday last month, it was easy to forget the early teething troubles at the HBOS-owned internet bank. "We're delighted with the success of the business," chief executive Jim Spowart said at the time. "Growth rates have been phenomenal."

But IF is not pleasing all its customers. Advertising sales- woman Kate Nicholl, 27, and her husband Alex tried to set up their first joint bank account with IF in September, using three cheques received at their August wedding.

"To start with, I had to send in three months of payslips, a utility bill, my original wedding certificate and a letter from work confirming my salary," says Ms Nicholl. "And then a month later they sent it all back saying they needed three months' worth of bank statements and payslips in my married name. I couldn't provide those as I'd only just got married. Then they said they'd accept my original passport or driving licence or photocopies signed on the back by a doctor or lawyer instead. By this time I'd had enough, so I said I'd go somewhere else."

But at this point she found she couldn't get her money back. "They hadn't cashed the cheques yet but I didn't hear anything for weeks. I phoned a dozen times but no one would help me. It was only when my husband phoned that they actually told us they'd deposited the cheques in a holding account and couldn't send them back," says Ms Nicholl.

"They said we had two options: either we asked the people who gave us the cheques for their the bank details so the money could be recredited to them; or we could continue to try to set up the account, take the money out and then close the account," she adds. "It's embarrassing having to phone the friends who gave us that money, but out of principle I don't want to set up an IF account now; I just want my money back."

IF told The Independent on Sunday that human error had caused the problem and it is in the process of issuing a cheque to the Nicholls covering the amount paid in plus interest and compensation.

"There was some confusion over the documents required for guarding against money-laundering," says Jennifer Blackwood, spokeswoman for IF. "That was what delayed the application process and we apologise for the mistake."

Many IF customers, however, are very happy with the service they receive. A report published last week in Money Which? gave IF a score of four out of five for general customer satisfaction, though it also noted that account holders have reported slightly more mistakes than with most other companies.

"It's a pretty good buy for borrowing and saving," says senior researcher Mike Naylor, "and there's a good rate for credit cards and loans. Anecdotally we hear positive things about the offset mortgage, though it can take longer to arrange than many other mortgages, possibly because of its popularity."

Stuart Glendinning, a director at Moneysupermarket. com, a website that compares financial products, says IF's products are very popular with customers using the site. "Its current account is the most popular of all the ones we offer, and its offset mortgage represents 7 per cent of the home loans arranged through our broker side."

But he adds that some applicants have given up trying to get IF products because the application process has taken so long. "IF has a single underwriting approach," he explains, "which means that once you've been accepted for one of its products, you've been accepted for everything. This means you have to answer more questions to be accepted, and that puts some people off."

Donna Bradshaw, director at independent financial adviser Fiona Price & Partners, likes quite a few of the internet bank's products but she has had problems herself with her own IF mortgage.

"I have an offset mortgage with IF and it's getting bigger because the bank is taking a fixed amount out each month, rather than the variable amount I'd requested," she explains. "It's a good product but the administration is problematic. I've been trying to get it sorted for weeks but it still hasn't been put right."