1.2m switch bank current accounts


Published: Wednesday 15th October 2014 by The News Editor

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More than 1.2 million current account holders have switched to a new provider in the first year of a new initiative aiming to take the hassle out of swapping banks.

A total of 1,203,334 switches took place between the start of October last year and the end of September this year, a 22% increase on the same period a year earlier, according to the Payments Council, which is overseeing the service.

Halifax, Santander and Nationwide Building Society have made some of the strongest customer gains since it became easier to ditch your old bank, while those which have seen net losses in customers include NatWest, Barclays, HSBC, Lloyds Bank, RBS and the Co-operative, its latest figures show.

The data covering which banks people are moving to is released voluntarily and with a six-month delay, and does not include all brands.

Of the banks which have released switching data, Halifax made the strongest net gain in current account customers between January and March this year, recording a 41,558 upswing, followed by Santander, which had a net 37,316 increase, while NatWest had the largest net loss, shedding 18,258 customers, followed by Barclays with 16,467.

The figures have been released at a time when the City regulator is looking to see if more could be done to take the fear factor out of moving your current account.

Under the switching service launched in September last year, the length of time it takes to swap banks has been cut from up to 30 working days to just seven. Outgoing and incoming payments are also automatically swapped over and if anything goes wrong the consumer is guaranteed not to be left out of pocket.

But under the current system people cannot take their account number with them. The Financial Conduct Authority is looking into whether more people could be tempted to switch if they could port their existing number over to a new account, as well as the likely cost this would involve.

There have been signs of current account providers ramping up competition since the new switching service was launched. Providers often use the relationship they have with current account customers to sell them other products, such as credit cards, loans or insurance.

Many current accounts now boast better interest rates than someone would expect to get on an easy-access savings account.

TSB and Nationwide Building Society both offer current accounts with a 5% rate of interest, Lloyds Bank offers up to 4% and Santander’s 123 account pays 3% plus cashback on household bills.

Halifax offers an account which pays £5 a month as well as paying £100 to people who switch to it, and the Co-operative Bank offers £100 to switch to it plus a £25 donation to charity.

Internet and telephone bank First Direct, which regularly tops consumer satisfaction surveys, offers £100 to switch.

Personal finance expert Andrew Hagger, founder of website Moneycomms, said: “The combination of a £100 golden hello and £5 monthly reward from Halifax looks as if it has struck a chord with customers looking to get something tangible in return for their custom.

“Santander is pulling in big numbers too despite charging £2 per month for its 123 current account. The ability to earn cashback on direct debits will more than wipe out the account fee for many customers, whilst the 3% rate on balances from £3,000 up to £20,000 is no doubt a big plus point, particularly with savings rates in the doldrums.

“To get 3% on your savings at present means having to tie your cash up in a fixed rate bond for five years, but with Santander you’re getting a double whammy of generous interest and instant access to your cash.”

New players have also recently been taking on the high street giants, with Marks & Spencer unveiling its first “free current account” and Tesco Bank launching its first current account.

The Payments Council’s regular survey of more than 2,000 consumers to monitor the success of the switching scheme has found that 69% of people in the UK are aware that it exists, up from 60% a year ago.

Gerard Lemos, executive chairman of the Payments Council, said: “We have created the perfect conditions for competition and choice to flourish amongst new and existing current account providers.”

Kevin Mountford, head of banking at website MoneySuperMarket, said: “While the numbers aren’t huge, 1.2 million switches in the last year is definitely a step in the right direction.”

He said the website’s own research has found that more than a quarter (27%) of people are motivated to switch by the in-credit interest rates on offer.

Mr Mountford said the data shows that Halifax, Santander and Nationwide have been the “clear winners” of the switching service so far, while various IT glitches and scandals “have caused customers to act and vote with their feet”.

Here are the net customer gains or losses that various current account providers made in the first quarter of this year. The figures, which do not include all brands, cover full account switches using the switching service’s guarantee. Some customers chose not to use the switching guarantee and these customers are not included in the figures:

:: AIB Group (UK), minus 835

:: Bank of Ireland, minus 528

:: Bank of Scotland, minus 85

:: Barclays, minus 16,467

:: Clydesdale Bank, minus 6,871

:: Co-operative, minus 7,852

:: Danske, minus 365

:: Halifax, 41,558

:: HSBC, minus 15,429

:: Lloyds Bank, minus 15,202

:: Nationwide, 11,680

:: NatWest, minus 18,258

:: RBS, minus 9,971

:: Santander, 37,316

:: Ulster Bank, minus 1,535

Published: Wednesday 15th October 2014 by The News Editor

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