3.2 million people use Current Account Switching Service in first three years
Over 3.2 million people have moved bank accounts via the Current Account Switching Service (Cass), which launched three years ago today to encourage more people to shop around for better value current accounts.
Cass makes moving bank account easier for consumers, small businesses and charities, with a guarantee that your new account will be set up within a week, and you won’t be left out of pocket if something goes wrong during the process. To date, 99.7% of account switches completed within the guaranteed period.
Additionally, regular payments, such as direct debits will also transfer over, and any payments made to your old account will be automatically forwarded on for the first three years.
Since launch, the number of banks and building societies signed up to the switching service has grown by a third to 43.
“Customers can hold their banks to account”
Simon Kirby MP, Economic Secretary to the Treasury, says: “Increasing competition in banking is part of the government’s plan to make sure that every customer can access the best deal for them. This is why we pushed the industry to introduce seven day switching in 2013.
“The seven day Current Account Switch Service allows customers to hold their banks to account by allowing them to vote with their feet and switch where they see a better deal – simply, quickly and reliably.”
According to MoneySupermarket, high interest rates are the most attractive feature for current account hunters, based on research into how users have been using its site. Behind that, cashback deals are the second biggest draw, followed by overdrafts and other benefits.
And separate research from the Co-operative Bank found most customers who’ve used the switching service have been convinced by it. The Co-op says that three quarters of overdraft users who’ve switched banks in the last three years would be willing to switch again in future.
While Cass has increased the number of people shopping around for current accounts, there’s more to be done, as highlighted by the Competition and Market Authority’s recent investigation into current accounts, specifically overdrafts.
In light of this report, Bacs, which runs Direct Debit in the UK, says it is working with banks to standardise the rules around overdrafts, and to make it easier for current account customers with negative balances to understand what their options are when moving.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
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.
Created in 1968, BACS is a not-for-profit industry body, owned by 16 of the leading banks and building societies in the UK and Europe. All direct debits, standing orders, credit card payments, personal loans and the vast majority of salary cheques are processed through BACS. In 2010, 5.7 billion UK payments with a total value of £4.06 trillion were processed through the system.