Drop in number of customers switching current accounts

Updated

Just over one million current account customers switched to a new provider last year - marking an 11% fall compared with 2014, according to new figures.

Some 1.03 million current accounts were switched during 2015, down from 1.15 million switches taking place in 2014, according to Bacs.

Figures published voluntarily by current account providers also showed that Santander, Halifax, Nationwide Building Society and Tesco Bank made net gains between April and June 2015 in customers switching using the current account switching service, while Barclays, NatWest, RBS and Lloyds Bank lost customers.

Santander, which has just upped the fee on its flagship 123 current account, was by far the biggest "winner" from the switching service - making a net gain of more than 66,000 customers between April and June.

Earlier this month, Santander increased the monthly fee for its 123 current account, which pays 3% interest as well as cashback, from £2 to £5.%VIRTUAL-ArticleSidebar-banking-guide%

Halifax offers customers £100 to switch to it as well as a potential £5-a-month reward. Tesco Bank offers clubcard points and 3% interest on balances up to £3,000 and Nationwide customers can get 5% interest on balances of up to £2,500 for the first 12 months. Nationwide also offers a £200 incentive for current account customers to "recommend a friend".

Richard Neudegg, head of regulation at uSwitch.com, said of the 11% fall in switching: "Despite 2015 seeing some of the best financial incentives for switchers, many still struggle to see the value in switching.

"The banks need to up their game and do more to help their customers understand their current account usage by prompting them with clear information."

But a spokesman for Bacs suggested the figures could also be a reflection of providers doing more to encourage customers to stick with them rather than switch.

He said: "The number of switches we see is largely influenced by the activity of individual banks and building societies - and that includes not just incentives to switch but also incentives to remain with the existing banking provider, as they work to retain their customers in an increasingly competitive marketplace.

"The current account switch service has been designed to encourage that competitiveness by removing barriers to changing banks for individuals, as well as for small businesses and small charities. And, since it launched at the end of 2013, more than 2.5 million accounts have been moved using the service."

In September, a new multimillion-pound drive was launched to raise awareness of the current account switching scheme which was launched in 2013 to make it easier to ditch your old bank or building society and move to a new one.

Bacs said that following the launch of the publicity campaign, the number of current account switches picked up.

Some 257,638 switches took place between October and December last year, marking an 11% increase compared with the previous three months.

By the end of December 2015, 72% of people in the UK were aware of the current account switching service, Bacs said.

This is still below a 75% target for customer awareness which was previously set for the middle of 2015 - although awareness has increased by 14 percentage points since the service was launched in September 2013. In the North of England, awareness is over the target, with 77% of people there having heard of the scheme.

Bacs said a fresh burst of activity to raise awareness of the scheme was launched in January, and has included TV advertising, radio and digital media.

The switching service was launched on September 16 2013. It was previously overseen by the now-defunct Payments Council and Bacs took over the service in 2015.

The service has cut the length of time it takes to switch a current account from up to 30 working days to just seven. All outgoing and incoming payments are automatically moved to the new account. Payments accidentally made to or requested from the old account are automatically redirected to the new account for 36 months after an account is switched.

Customers using the service are guaranteed not to be left out of pocket if anything goes wrong with the service, which is managed and owned by Bacs, the company responsible for direct debit and Bacs direct credit in the UK.

Helen Saxon, chief product analyst at MoneySavingExpert.com, said: "Santander and Halifax are the big winners and it's no coincidence. They offer current accounts which reward customers every month for staying - though it will be interesting to see what impact Santander's raising of its 123 account fee has on the next figures. These two accounts also take two of the top five spots in our biannual banking service poll, showing customer service is an important consideration."

She continued: "If you're not gaining anything from your bank, switch now."

A Treasury spokesman said: "The fact that there have been over one million switches over the past year, and over 2.5 million switches in total, shows that the service has been a huge success with more and more customers now holding their banks to account by voting with their feet."



The Banks Paying Little UK Tax
The Banks Paying Little UK Tax

Advertisement