20th August 2013
Two-fifths of Britons are gearing up to switch their current account next month as a new fast-transfer service goes live writes Philip Scott.
Following the announcement of the Current Account Switch Service’s launch in September, two-in-five people believe they will switch their current account as a result, and 11 per cent will do so for the very first time, according to a poll from price comparison site Moneysupermarket.
From September 16 a new agreement means that banks and building societies will guarantee to move your account and direct debits within seven working days, a huge reduction from the traditional 30 day time period.
So far 33 banks and building societies, representing the lion’s share of current accounts in the UK, have signed onto the pledge,
With the new switching service all outgoing and incoming payments will be moved over to a customer’s new current account and that accidental payments will automatically be redirected to the new account.
The poll of 1,750 Moneysupermarket site users found 42 per cent will now be more inclined to switch, with a quarter, at 26 per cent, saying they will do so if there is a better deal available.
Of those, 5 per cent keep tabs on the market and state that they switch regularly, and so this guarantee will make it easier. Of those who do not plan to switch their bank account 39 per cent are satisfied customers, stating the reason for this is because they are happy with their existing current account deal.
However, some people still need to be convinced that the Current Account Switch Service will really help their situation, with eight per cent claiming that the process still seems like too much hassle. Furthermore, 9 per cent will also not be switching as they believe that “all banks are the same”.
This is despite the fact that numerous banks have been making enhancements and upping the ante on their offerings ahead of the new service coming live. For example, First Direct has increased its current account switching cashback offer to £125, while Halifax is offering £100 to switch but you have to close your previous account to qualify.
Kevin Mountford, head of banking at Moneysupermarket, says: “The launch of the Current Account Switching Guarantee is good news for consumers with the process becoming even more streamlined than before. It is great to see that two in five plan to take advantage of the new switching rules, and even better that one in ten will be switching for the very first time.”
Executive director of consumer watchdog Which?, Richard Lloyd, says: “Making the process of changing banks easier means that people can more quickly vote with their feet when they are dissatisfied with their bank and have more confidence that they will not lose essential direct debits and credits. However, on its own the seven-working-day switching service will not necessarily transform competition in retail banking.
“All banks need to be giving customers a reason to switch to them by offering better products and customer service, and by making it simple for people to compare the cost of running a current account. If the new service fails to transform switching rates from last year’s tiny 3 per cent, the Government should speed up moves towards bringing in portable account numbers. Ministers must also keep driving forward wider reforms to improve culture, standards and competition in banking.”
Mountford adds: “Although many people are satisfied with their current account as it stands, it is still always worthwhile keeping an eye out on what is available on the market. A current account can be a drain on your finances if you are not on the deal most suited to your needs, particularly if you utilise an overdraft facility.”