Banks 'could face customer exodus'

Natwest branchTim Ireland/PA Archive/Press Association Images

Millions of disgruntled customers could switch their accounts in the coming weeks and months following the recent spate of banking scandals, research suggested.

Building societies and comparison websites have reported large upswings in activity as competition mounts to attract consumers in the wake of NatWest's IT meltdown and Barclays' Libor-fixing scandal.
Almost a fifth (18.4%) of people surveyed by comparison website MoneySupermarket said they had lost trust in their bank completely and planned to move their money somewhere else.

Meanwhile, Moneyfacts said visitors to its current account "best buy" tables are at their highest for the financial information website in nearly two years.

Kevin Mountford, head of banking at MoneySupermarket said: "There are around 60 to 70 million accounts in the UK so the impact could be huge. I'm not saying they will all follow through with it, but this should fire a warning shot across the bows of the banks."

The Building Societies Association (BSA) said customer inquiries generally have been running at up to 30% above normal levels.

A spokeswoman for the BSA said: "It is clear from speaking to many of our members that the number of customer inquiries they are getting has risen substantially in the past week or so. While it's impossible to be absolute, the rise in consumer interest we are already seeing is up to 30% above normal levels. In addition, some members are already reporting a jump in account openings."

In the two weeks to last Friday, Nationwide saw a 45% increase in people transferring their main account to the society, including branch, online and telephone applications. Co-op has also reported a 48% increase in online current account applications over the same period, compared with the previous fortnight.

Yorkshire Building Society said it has seen a 10% increase in branch activity and on Monday last week it accepted more than double the deposits into its "back to basics" Triple Access Saver account than it usually receives, including money into new accounts opened and deposits into existing accounts.

The account, which cannot be accessed online and requires customers to use a passbook in branch, is already Yorkshire's most popular easy access account. It launched the account, which has a minimum opening balance of £100, a year ago this week in response to the appetite shown for a more traditional offering.

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