Have you ever been fed up with your bank and been determined to switch to another account, but been put off by the paperwork and the time it takes? Are you worried that your direct debits and payments to new providers will go missing?
You are not alone. In fact, research shows that a typical bank customer stays with their bank for an average of 17 years, that’s 6 years longer than the average length of a marriage. And three quarters of accounts are still being held by the ‘big four’ high street banks, that’s Lloyds, HSBC, RBS and Barclays.
But a new Current Account Switch Service, which promises a quick and easy seven day switching could soon put an end to the monopoly of the four big banks, as an overhaul of the system, costing around £750 million is set to shake things up.
From Monday, the UK’s 46 million current account holders will be notified, via a huge ad campaign, of the 7 day switching campaign, which means that it will be a much simpler and easier process to switch to any of the other 33 banks or building societies, without the fear of missing payments, direct debits going astray or lost standing orders.
The Payments Council, which is an independent body at the forefront of the new campaign, says that switching your bank account will now become “reliable and hassle-free”, and boasts: “The service will remove the need for customers to liaise with their old bank or building society when they have made the decision to switch. The new provider will take full responsibility for delivering the switch and the customer’s old current account will close once the switch is complete.”
So the emphasis is taken off the old bank and placed firmly on the new bank, taking on the new business, and it is this concept that the Payment Council think will be the big difference, and it is the relatively new banks on the block who have the most to gain, such as Metro Bank and Virgin but also Santander and First Direct, who typically gain a lot of customers, via switching. In fact, nearly all of First Direct’s 1.3 million current account holders have switched from other banks, and are offering £125 to lure customers from other accounts.
Tracy Garrad, head of First Direct, said: “We don’t expect there will be hundreds of thousands of people switching overnight, but we do expect to be high on the list for anyone switching. It’s still amazing that around 44% of people have never switched their bank account.”
Also targeting switching customers ahead of the 7 day switching campaign are Santander who are advertising their 123 account, and Halifax who are offering £100 to people who switch to its Reward account.
But these banks have their work cut out for them, as although there are an estimated 80 million current account holders in the UK alone, only around 2 million of them switched last year. And studies from business analytics company SAS, based on a YouGov survey, suggests that only 5m accounts might decide to switch in the next 12 months.
There are some experts that think it is little to do with the difficulty of setting up new payment plans, but the desire the keep the same bank numbers. Conservative MP Andrea Leadsom, a member of the Treasury select committee, thinks that what is stopping people switching bank accounts is the fact that they have to take on new sort codes and account numbers, and she thinks that if these numbers were portable, more people would be more likely to want to switch.
However, the money guru that is Martin Lewis, creator of MoneySavingExpert.com, thinks that most people are just too lazy to do anything about it, and says: “Far too many people whinge that their bank is a bastard, but then do nothing about it. A whole swath of the country still has the same bank account they set up as a child on the back of being given a piggy bank. Don’t whinge, ditch and switch.”
But although he might have a point, one survey suggested that one in five people would rather go to the dentist than try to switch their current account.
Source: The Guardian