Current account providers are taking a pummelling. From reducing interest rates to zero in some cases, mis-selling payment protection cover and supplying false information for inter-bank rates, the scenario could hardly be worse.
At a stroke they could gain some kudos by immediately implementing a guaranteed switching service for current accounts.
The Payments Council has set in motion a database which will link both former and new accounts and ensure regular transactions entering and leaving will be honoured correctly. The planned transfer will take a maximum seven days.
However, the council is dragging its feet. Instead of introducing such a straightforward and desperately overdue mechanism now, it is working at a snail’s pace by postponing such help until September next year.
We are all too familiar with the lacklustre IT departments of many banks. Santander cannot even write a computer programme that transfers standing orders from one account to another. The Royal Bank of Scotland, 84 per cent taxpayer-owned, along with its Ulster Bank subsidiary, has let its customers down dramatically – again an inexcusable IT failure.
Bankers smirk when queried why a switching service is so slow and cumbersome. It places the onus on the individual to contact everyone, aware this is a disincentive to make the move. This probably explains why only 25 in 1,000 current account holders switched last year.
Research by the Payments Council reveals that two-thirds of clients who have not switched are concerned that if they do change banks, something will go wrong. They have every right to show caution as a staggering 10 per cent of those who moved accounts had problems.
Some will have a change thrust upon them. Customers of 632 Lloyds TSB branches are to have their current accounts compulsorily moved to the Co-op Bank following a sale ordered by EU regulators after the Government’s capital injection three years ago.
Perhaps instead we should move to portable current account numbers, as advocated by Sir John Vickers, head of the banking commission, permitting customers to switch without concern between banks.