Cuts in rates and perks lead to more customers switching current accounts

More current account customers have been ditching and switching their bank following a wave of providers cutting rates or reducing perks on their accounts.   

Some 248,302 switches took place between January and March 2017 according to payments body Bacs, which oversees the current account switch service.

This was higher than the 208,387 switches that took place between October and December 2016.

In total, more than 3.7 million current accounts have been switched since the seven-day service to make it easier for customers to ditch and switch was launched in September 2013.

Over the last 12 months, 949,047 switches were completed, which is down on the 1,061,144 in the previous 12 months.  

But the figures show that current account switching has been creeping up this year so far. Nearly 96,000 switches took place last month and around 90,000 switches were made in February, compared with just under 62,000 in January. 

Several current account perks were made less generous by providers around the end of 2016 and the start of 2017.

In August 2016, Santander announced that a 3% rate on its flagship 123 current account would be halved to 1.5% from November 1 2016. It said the changes were due to "the market expectation of interest rates staying lower for longer".

Other cuts that have since come into place include Lloyds Bank cutting a rate from 4% to 2% and TSB reducing a rate from 5% to 3%. Halifax dropped its £5 monthly reward payment on its Reward current account to £3 in February.

Tesco Bank has bucked the downward trend by guaranteeing to maintain a 3% rate until April 1 2019, while Nationwide Building Society continues to offer a 5% rate.

Bacs said awareness levels of the current account switch service reached a new record high of 79% in March - representing an increase of 21 percentage points since its launch.

Figures from current account providers in Bacs' report also show that Halifax made a net gain of more than 28,000 current accounts being switched to it between July and September 2016.

Santander made a net gain of over 26,000 switches over the same period, despite August's announcement about its rate cut, while Nationwide gained just under 26,000 switches net. The Co-op and Tesco also made net gains in current account switches over this period.    

Barclays recorded a net loss of just over 21,000 current account switches, while HSBC, Lloyds Bank, NatWest and RBS also made net switching losses.

These figures only cover customers using the current switching service, not those switching outside the service.  

Here are the net gains or losses made by providers in current account switches taking place between July 1 2016 and September 30 2016:

:: AIB Group (UK) plc (includes First Trust Bank and Allied Irish Bank brand switches), minus 632

:: Bank of Ireland (includes the Post Office brands) minus 618

:: Bank of Scotland, minus 790

:: Barclays, minus 21,008

:: Clydesdale Bank (includes Yorkshire Bank) minus 7,716

:: Co-operative (includes Smile) 2,438

:: Danske, minus 607

:: Halifax, 28,116

:: HSBC (includes First Direct and M&S Bank brands) minus 14,648

:: Lloyds Bank, minus 13,464

:: Nationwide, 25,939

:: NatWest, minus 15,807

:: RBS (includes Adam & Company, Coutts and Isle of Man brands), minus 9,162

:: Santander, 26,196

:: Tesco Bank, 301

:: TSB, minus 141

:: Ulster Bank, minus 1,070

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