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A high-profile campaign to encourage bank customers to move their current account has resulted in just 9,000 extra switches in the first month.
In spite of two years of planning and a multimillion pound advertising campaign, just 89,000 of the UK’s 76m current accounts were moved to a new provider. During the same four-week period last year, 80,000 account switches were completed.
The Payments Council, an industry-led body responsible for the new switching service, called the slight rise encouraging.
“We never expected that every customer who is tempted to switch would rush out to do so at launch, but this is an encouraging start,” said Adrian Kamellard, the council’s chief executive.
Switching levels are not the best measure of success, according to the Payments Council, which has not been set a target for switching volumes. Instead, the group said the new service was all about empowering the customer.
People in the UK are more likely to separate from their spouse than their bank, and yet customer satisfaction rates for some of the country’s largest providers remain poor.
Just 56 per cent of Lloyds customers would recommend the bank to a friend, according to consumer group Which? And only 53 per cent of Royal Bank of Scotland customers would do the same.
Overdraft charges, payment protection insurance mis-selling and failure to lend to small businesses are all repeated by consumers as grievances, and yet out of the UK’s current account holders, just 3 per cent chose to leave their existing bank and open a new account last year, according to GfK’s financial research survey.
Campaign groups say that it is concerns about switching and inertia, rather than loyalty, that keep bank customers rooted to their provider.
As a result of large-scale consolidation since the financial crisis, just four providers, Lloyds Banking Group, RBS, Barclays and HSBC, have around 75 per cent of the market. This leaves little room for new challengers such as Metro Bank and M&S Bank to make a mark and provide consumers with more choice.
Following recommendations from Sir John Vickers in 2011 that customers should be provided reassurance that their current account would be moved within seven days without any problems, 33 of Britain’s biggest banks and building societies signed up to the Current Account Switch Service which came into effect on September 16.
As well as ensuring that accounts are moved from one provider to another within the time limit, banks have also agreed to oversee the redirection of all incoming and outgoing payments.
Ahead of the new rules, a number of banks launched incentives to win new customers. Halifax, for example, is offering £100 to customers who move.
Consumer campaign group Which? said the seven-day promise was not enough to transform switching and significantly increase competition.
“These early figures are a positive sign that more consumers might be voting with their feet when they’re dissatisfied with their bank, but suggest that the new process alone will fail to transform switching rates and significantly increase competition in banking,” said Richard Lloyd, Which? executive director.
One change put forward by campaigners is for bank accounts to carry portable numbers which customers can take with them to a new provider, in the same way that they retain their mobile phone number when switching networks.
The banking industry has rejected this idea as complicated and expensive, estimating the cost at £5bn.
http://www.ft.com/cms/s/0/9d3eb46c-3...#axzz2iQJMTI00
In spite of two years of planning and a multimillion pound advertising campaign, just 89,000 of the UK’s 76m current accounts were moved to a new provider. During the same four-week period last year, 80,000 account switches were completed.
The Payments Council, an industry-led body responsible for the new switching service, called the slight rise encouraging.
“We never expected that every customer who is tempted to switch would rush out to do so at launch, but this is an encouraging start,” said Adrian Kamellard, the council’s chief executive.
Switching levels are not the best measure of success, according to the Payments Council, which has not been set a target for switching volumes. Instead, the group said the new service was all about empowering the customer.
People in the UK are more likely to separate from their spouse than their bank, and yet customer satisfaction rates for some of the country’s largest providers remain poor.
Just 56 per cent of Lloyds customers would recommend the bank to a friend, according to consumer group Which? And only 53 per cent of Royal Bank of Scotland customers would do the same.
Overdraft charges, payment protection insurance mis-selling and failure to lend to small businesses are all repeated by consumers as grievances, and yet out of the UK’s current account holders, just 3 per cent chose to leave their existing bank and open a new account last year, according to GfK’s financial research survey.
Campaign groups say that it is concerns about switching and inertia, rather than loyalty, that keep bank customers rooted to their provider.
As a result of large-scale consolidation since the financial crisis, just four providers, Lloyds Banking Group, RBS, Barclays and HSBC, have around 75 per cent of the market. This leaves little room for new challengers such as Metro Bank and M&S Bank to make a mark and provide consumers with more choice.
Following recommendations from Sir John Vickers in 2011 that customers should be provided reassurance that their current account would be moved within seven days without any problems, 33 of Britain’s biggest banks and building societies signed up to the Current Account Switch Service which came into effect on September 16.
As well as ensuring that accounts are moved from one provider to another within the time limit, banks have also agreed to oversee the redirection of all incoming and outgoing payments.
Ahead of the new rules, a number of banks launched incentives to win new customers. Halifax, for example, is offering £100 to customers who move.
Consumer campaign group Which? said the seven-day promise was not enough to transform switching and significantly increase competition.
“These early figures are a positive sign that more consumers might be voting with their feet when they’re dissatisfied with their bank, but suggest that the new process alone will fail to transform switching rates and significantly increase competition in banking,” said Richard Lloyd, Which? executive director.
One change put forward by campaigners is for bank accounts to carry portable numbers which customers can take with them to a new provider, in the same way that they retain their mobile phone number when switching networks.
The banking industry has rejected this idea as complicated and expensive, estimating the cost at £5bn.
http://www.ft.com/cms/s/0/9d3eb46c-3...#axzz2iQJMTI00
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