The vast majority of people do not want to switch bank, because most of them are happy with the service they currently receive, according to new figures revealed exclusively to the Yorkshire Post by the British Bankers’ Association (BBA).
The data – officially due out on Tuesday – show that 83 per cent of British bank customers are either “not at all likely” (53) or “not very likely” (30) to switch bank account provider within the next 12 months. Of those, 60 per cent said it was because they were happy with their bank account, and 45 per cent also said it was because they didn’t see the benefit of switching. Just three per cent said they were “very likely” to switch provider.
The figures add substance to the BBA’s argument that there is little appetite among customers for increased “portability” of accounts, which has been the subject of much recent debate.
Over the last week, City minister Andrea Leadsom has said that she believes people should be able to switch accounts within 24 hours, and that she may even be in favour of making it a feature of the Conservative election manifesto “if the cost-benefit analysis stacks up”. She later said that it could ultimately mean the end of free current accounts.
Under the present system, introduced last September, customers can switch accounts from one bank or building society to another within seven days. Previously, switching accounts took at least 18 days, and this was widely seen as a barrier to switching, and hence an impediment to competition in the banking sector.
But Ms Leadsom, a former City fund manager, doesn’t believe seven-day switching goes far enough, saying: “You’re more likely to divorce than to switch bank accounts. That’s a crazy statistic.”
The banking industry, however, is reluctant to compress the switching timeframe from seven days into one, citing the cost and regulatory obstacles.
Anthony Browne, chief executive of the BBA, says the seven-day system is working well and points out that “nearly a million” people have used the service since it was introduced last autumn.
“Due to regulations the banks have to comply with around money laundering, it is probably not possible to have ‘instant switching’ and there is also no real evidence that there is a demand from customers for this,” he said.
Ms Leadsom has an ally in the debate in James Daley, managing director of consumer rights group Fairer Finance, who believes portable bank account numbers would be a way of sidestepping the regulatory issues.
“Customers would have one account number that they could take with them from bank to bank. Switching from one bank to another while keeping all the same details shouldn’t create a money laundering risk,” he said.
“Portable accounts would create true competition, and ensure banks needed to work harder to compete both on price and service.”
Ultimately, it is the cost of the proposed change that will decide the issue. Modifying the banks’ computer systems to accommodate the change would set the banks back an estimated £10bn – a sum they are unwilling to part with. The answer, according to Ms Leadsom, may be for the customer to pick up the bill. “I don’t think it needs to mean the end of free-while-in-credit [banking] but at the same time, I would imagine it would lead to a variety of methods of paying for banking,” she said.
The issue may ultimately be decided with the publication by the Financial Conduct Authority (FCA) of a cost/benefit analysis of portability announced in the last budget.
Ms Leadsom is hoping it will be available before next year’s election, but the FCA says that work will not begin until September – one year after seven-day switching came in – and a publication date is a long way off being fixed.
Until then, it seems, customers should be spared paying to have a current account.