Sorry saga of a student bank account

The deal was appealing but the time it took to process was appalling, says Christine Stopp

An interest-free overdraft is an essential money-management tool for today's student. So, when Graeme Colverson, who lives near Cambridge, received confirmation in August of his place to read history at the University of East Anglia (UEA) in Norwich, he looked around for a suitable current account. With a girlfriend in Yorkshire, Graeme was expecting to do quite a bit of train travel, so a free five-year Young Person's Railcard was an attractive perk.

An interest-free overdraft is an essential money-management tool for today's student. So, when Graeme Colverson, who lives near Cambridge, received confirmation in August of his place to read history at the University of East Anglia (UEA) in Norwich, he looked around for a suitable current account. With a girlfriend in Yorkshire, Graeme was expecting to do quite a bit of train travel, so a free five-year Young Person's Railcard was an attractive perk.

The two banks offering interest-free overdrafts and the Railcard were HSBC and NatWest. Graeme chose the latter. He tried to visit a branch on a Saturday morning but found it closed, so he applied online on a Sunday, 29 August.

"We expected an almost instant e-mail acknowledgement, and follow-up by post within a day or two," says Graeme's father, Simon. The next Thursday, 2 September, the family phoned the bank and was told the matter was in hand, but had probably been delayed due to high volumes of new account holders.

On 7 September a letter arrived, asking Graeme to present his identification documents by post or at a bank branch. He went to a branch two days later and was told the account would be open on the following Tuesday, 14 September. Graeme was away in Yorkshire for a few days, but phoned the branch on 16 September to get his new account details. Branch staff had difficulty tracing it. They eventually told him that the Glasgow office dealing with internet applications was snowed under, could not trace his application, and could not tell whether his identification details had reached his file.

Bearing in mind the delay, branch staff said that if Graeme came into the branch they would open the account for him there and then. This Graeme did. He was told the account would be open by the end of that working day - which it was.

Graeme, in the throes of freshers' week, was told that his account was open and he should receive his welcome pack and cash card by 28 September - almost exactly a month from the date of his initial application. He could also apply to operate the account online, which would take a further week to set up.

Graeme's parents were not impressed by the delay: "We bank by phone and internet and are used to things being processed quickly. We were amazed at how slowly the application was dealt with. One call-centre operator actually told us it was our fault for applying so late."

The problems did seem to lie with the internet and call-centre operation, as the Colversons were happy with the service from branch staff, who offered a quick solution once they became aware of the problem.

However, Simon said: "When you phone a call centre for help, you are always in a queue. But when you phone the information line as a potential new customer, they pick up on the first ring. If we had known the difficulties we would have with the internet, we would have gone back to the branch. Their opening hours are limited, but at least you get someone's name and a direct-line number."

NatWest denied that the delay Graeme experienced was a general problem with new student accounts. "There are definitely no delays and no backlog on student applications," said a spokeswoman. "This seems to be a case where something has gone wrong with an individual application. We have had no other complaints of this nature. We shall be apologising to this customer since he has received unacceptable service and wrong information. As a gesture of goodwill, we will credit £50 to his new account."

NatWest, part of Royal Bank of Scotland, says that students going into a bank branch should be able to open an account on the spot. As with any bank account, verification of your address plus photo ID are needed. In addition students need confirmation of student status. The UCAS confirmation letter and a passport will do the trick. Setting up an account on the internet should take no more than about a week, says NatWest.

Other banks claimed it should take only days to set up a student account. HSBC said that a new customer who takes in the appropriate identification can open an account on the spot. A phone or internet application should take only three days. In all cases, the time taken will depend on how quickly you can get to the branch with your documents. You cannot apply over the internet with Barclays, but can open an account straight away at a branch with the right documentation. You should get a chequebook within five days.

The Co-op's internet bank, Smile, says that from the moment you apply online, it should take about two weeks for the account to be up and running. There is usually no need to provide documents or to sign anything before the account is opened, and there is no need to apply separately for internet access to the account. Smile offers students interest-free overdrafts. Details of student accounts are available on the internet at www.support4learning.co.uk.

Current estimates from the National Union of Students suggest that, after fees and rent are paid, typical student expenditure for a 39-week university year in 2003/04 was about £4,617 - almost £1,000 more than the full student loan of £3,698. Students are likely to need the interest-free overdraft while they work behind a bar or shop counter to plug the gap in their budget. The overdraft also lends itself to nifty financial planning: try putting your loan into your bank's tax-free ISA and living on the free overdraft, then paying off the overdraft in one go towards the end of term.

NUS information sheet 17, 'Managing Your Money', gives further help on budgeting. See www.nusonline.co.uk.