1.2 million switch bank account in past 12 months
More than one million bank customers switched current accounts in the first 12 months of the new switching service, figures have revealed.
The Payments Council found that 1.2 million customers swapped their current account provider in the year following the introduction of the Switch Guarantee scheme in September 2013 – a 22% increase on the previous 12 months.
The scheme was designed to simplify the process of switching accounts for customers who were unhappy with the service they received from their provider. Under the scheme, customers are now able to switch within seven working days, compared to the 30 it took to switch previously.
The Payments Council also found that 69% of Brits were aware of the scheme - up from 60% last October, while consumer confidence in the process has now reached 62%.
Over the year, Halifax and Santander experienced the biggest increase in net new account holders, while Natwest had seen the largest fall.
Step in the right direction
Gerard Lemos, executive chairman of the Payments Council, said: "These latest figures clearly suggest that the good news is getting through to all those customers who want to change provider – that there has never been a better time to do it."
Kevin Mountford, head of banking at Moneysupermarket, added: "While the numbers aren't huge, 1.2 million switches in the last year is definitely a step in the right direction, and hopefully this will continue.
"Halifax, Santander and Nationwide are the clear winners over the past 12 months, showing that listening to customers and taking more of an innovative approach pays off, such as with Santander's 123 account.
"It's also great to see that a building society is able to compete with the big banks. In terms of losers, NatWest and Barclays are at the bottom of the pile, highlighting the fact that recent IT glitches and mis-selling scandals have caused customers to act and vote with their feet."
The practice of a dishonest salesperson misrepresenting or misleading an investor about the characteristics of a product or service. For example, selling a person with no dependants a whole-of-life policy. There have been notable mis-selling scandals in the past, including endowment policies tied to mortgages, employees persuaded to leave final salary pensions in favour of money purchase pensions (which paid large commissions to salespeople) and payment protection insurance. There is no legal definition of mis-selling; rather the Financial Services Authority (FSA) issues clarifying guidelines and hopes companies comply with them.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.