Government proposes new measures to help customers switch bank accounts
23 Oct 2015
The Government has published a series of new ‘principles’ designed to help customers switch bank accounts and utility providers more easily.
The move comes after a study by the Competition and Markets Authority (CMA) found that only 3% of bank customers switched current accounts in 2014, and concluded that competition in the retail banking market is ineffective.
The survey – conducted over 18 months – found that 57% of customers had stayed with their existing current account provider for more than 10 years, and 37% have not switched in over 20 years. The CMA claimed that an average high street bank customer could save £70 a year by switching to a better deal, but that a lack of information and fears that the process would be ‘complicated, time-consuming and risky’ continue to deter people from doing so.
It recommended that high street banks should prompt customers to switch at certain trigger points, such as a branch closing or increased charges, and that a new price comparison website for small businesses should be established.
The CMA’s Alasdair Smith said: ‘Despite some encouraging developments, particularly in the shape of challengers that have entered the market in recent years, for too long banks have been able to sit back and take their existing customers for granted.’
Meanwhile, the Government’s department for Business, Innovation and Skills (BIS) has published new switching principles for banks, energy and telecoms providers, including:
- Switching should usually be free for consumers.
- The process should be quick and should happen on an approved date.
- Price comparison sites should make it clear what payments they receive from the suppliers they display.
- Customers should have access to their consumption or transaction data, which they can take to price comparison sites.
The principles form part of a consultation process into bank and utility competition, which ends on 4 December.