Bank account switching up 19% in first year

Time for a new bank? sign

The system that allows UK bank customers to switch their accounts in just seven days has been hailed as a success, a year after it started.

According to the Payments Council, there has been a 19% increase in the numbers switching.

However, the head of the Financial Conduct Authority (FCA) suggested the results had been disappointing.

"The actual number of people switching has remained relatively low," Martin Wheatley told MPs this week.

In the first 11 months of its operation, 1.1 million customers switched their account to another bank, compared with 926,000 switches in the previous period.

The figures suggest just 2.2% of current account holders used the system to change provider.

Nevertheless, the Payments Council, which administers the system, said it had been a success.

Image copyright Payments Council

"It's clear from reviewing its very first year that it's made great ground - empowering customers with the ability to switch their bank account easily and quickly if they choose to do so," said Gerard Lemos, the Payments Council executive chairman.

The Current Account Switch Service was introduced on 16 September 2013.

Since then, it has been possible for customers to move their accounts in seven days, instead of the 18 to 30 days it took previously.

'Free' banking

Some experts believe the complexity of bank charges is a barrier to switching.

The Financial Services Consumer Panel, which advises the Financial Conduct Authority (FCA) is calling for an inquiry into the way banks charge customers for their current accounts.

Even though the accounts often appear to be free, they are often cross-subsidised by overdraft charges, for example.

"Consumers do not understand the real price they are paying for their 'free' banking, nor whether they would get a better deal elsewhere," said Sue Lewis, the chair of the Consumer Panel.

It is calling on the Competition and Markets Authority (CMA) to oversee the investigation.

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