Business

Bank current account switching reaches 1.2 million

Cash and bank statement Image copyright Getty Images
Image caption The guarantee means customers should be able to switch within seven working days

Some 1.2 million current accounts were switched to a new bank by customers in the first year of a new government-backed scheme.

Current account holders can now move their bank account to another provider within seven working days instead of up to 30 days under the previous regime.

Switching levels were 22% up on the previous year, as some banks offered incentives for customers to switch.

But this remains a fraction of the 46 million current accounts in the UK.

Plan 'working'

The figures cover the 12 months, to the end of September, since the introduction of the switching guarantee.

In addition to the swifter switch, the guarantee means the new bank or building society has to arrange for the transfer of all existing incoming and outgoing payments to the new account.

The Payments Council said that, as well as the increased numbers, its survey suggested that 69% of people in the UK were aware of the service.

The figures have been welcomed by the Treasury.

"A central part of our long-term economic plan has been to reform banking to make it easier to switch bank accounts. [This] data shows that plan is working," said Chancellor George Osborne.

Incentives

The data also includes information on the gainers and losers from the switching process, although this only covers the first three months of the year.

NatWest recorded the biggest fall in account holders, with the Halifax and Santander attracting the most new current account custom.

Andrew Hagger, of website Moneycomms, said that these two banks had advertised heavily and had offered incentives to switch at the start of the year.

However, he said that incentives were not always the best option for customers as they shopped around, especially if they occasionally relied on an overdraft.

"Despite the best efforts of consumer groups and comparison sites it still remains a challenging task for consumers to find the best bank account for their circumstances," he said.

"There are many areas to for a customer to consider before moving banks, particularly if it is a move driven purely by a short-term incentive."

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