Promise of quick account switch fails to attract big numbers
UK current account switches rose by 11% in the four weeks following the implementation of the '7 day switching' scheme, launched on 16 September.
UK current account switches rose by 11% in the four weeks following the implementation of the ‘7 day switching’ scheme, launched on 16 September.
Under the new plan, banks that have signed up for the scheme are obliged to ensure that account switches occur within a week, down from the up to 30-day wait previously experienced by users, with outgoing and incoming payments being automatically transferred to the destination bank within the 7-day limit.
Numbers show that during the same four-week period in 2012, current account switches totalled 80,000, a figure which rose to 89,000 in 2013.
Part of a wider bid by the UK Payments Council to promote competition within the banking industry, the figures were seen by critics as betraying the policy’s lack of effectiveness.
Dogged by scepticism since its proposal, many doubt the new framework’s power to change the current account switching process, let alone significantly impact on the banking system as a whole.
Commenting on the figures, consumer charity group Which? said it would "fail to transform switching rates and significantly increase competition in banking".
Richard Lloyd, the group’s executive director, said: "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.
"Banks must make it simple for people to compare the cost of running a current account so they can be confident in their choices and give customers a reason to switch by offering better products and customer service."
However, the Payments Council expressed satisfaction with the numbers, adding that they expect them to pick up over the coming weeks.
Adrian Kamellard, chief executive of the bank-funded trade body, said: "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."