1.1m have switched banks since new scheme introduced

Fear factor of switching banks removed

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Some 1.1 million current account customers have switched provider - using a service aimed at taking the fear factor out of moving to a new bank - in the first 11 months since the initiative was launched.

The number of switches which took place between October 1 2013 and August 31 this year represents a 19% increase on the number of current account switches recorded during the same period a year earlier, the Payments Council said.

The figures were contained in a progress report into the current account switch service, which launched on September 16 last year.

The service allows people to ditch their old bank and move to a new one in seven working days, instead of up to 30 working days previously.

Outgoing and incoming payments are also automatically moved over to the new account.

The Payments Council, which commissions monthly surveys of more than 2,000 consumers to check awareness and satisfaction levels around the switching service, said 70% of people had heard of the service and 61% were confident about what it was and how it worked.

Some 88% of consumers who had switched accounts felt it took very little effort on their part.

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The Payments Council is measuring the success of the scheme on awareness and confidence rather than the number of switches, as some people may be happy with their existing bank and may not want to switch.

A target that 75% of people should be aware of and confident in the service has been set for the end of June next year.

The service, which covers almost all of the UK's current account market, can be used by small businesses and charities as well as consumers.

Banks often use their relationship with current account customers as a basis to sell them other products.

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There have been signs of competition ramping up between current account providers over the last year, with several current accounts offering better rates of interest than someone would expect to
get from an easy access savings account.

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

Meanwhile, Halifax offers an account which pays £5 a month as well as paying £100 to people who switch to it.

The Co-operative Bank, which is re-vamping its ethical policy which gives its customers a say on issues which matter to them, is offering people £100 to switch to it plus a £25 donation to charity.

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

Had enough of your bank? Switch banks today

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

Gerard Lemos, executive chairman of the Payments Council said: "The current account switch service is a fantastic example of the power of collaboration and shows what can be achieved when highly competitive businesses put aside their differences to work together for the greater good.

"The service was designed to make life easier for customers by removing barriers to switching, with the aim of boosting competition in the banking sector.

"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."

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