Proposals by the Independent Commission on Banking (ICB) to improve the process of switching current accounts between banks have been welcomed by consumer watchdogs, but Which? said that customer inertia towards changing providers also needed to be overcome.
The ICB’s interim report on banking reform, published last Monday, suggested setting a time limit of seven working days for banks to complete switches.
It also said that account number “portability” – allowing customers to keep the same account number when changing providers – should be considered as this would remove the need to transfer direct debits and standing orders.
James Daley, editor of Money Which?, said that making switching easier would force banks to improve interest rates and customer service to retain customers – although the ICB also said that the higher capital costs it proposed for banks could feed through into less attractive pricing.
However, Daley pointed out that while most people have never transferred their current account to a different bank, Which? research showed that those who did found it easy.
“Customers are afraid of things going wrong when switching and there is a perception that all banks are the same (so it’s not worth switching),” he said.
Santander said that the 1m new accounts it opened in each of the last two years showed that people were already prepared to switch.
However, while the Spanish bank offers 5 per cent interest for a year and a £100 incentive for switching, Daley warned that it also came bottom for customer satisfaction in research by Which?