The implementation of the Current Account Switch Service – the groundbreaking new shake-up of the country’s retail banking sector – is set to come into effect on September 16th, the Payments Council has announced.
The new initiative is set to make it easier than ever for consumers to switch their bank account, and take-up is expected to be significant, with recent uSwitch research indicating that 42% of consumers will take advantage of the new service when it is brought in – compared with just 11% who have switched their current account in the last 12 months.
Full market coverage
According to the Payments Council, 33 bank and building societies representing almost the entire marketplace will deliver the new switching service from the middle of next month, removing a significant amount of red tape, hassle and wasted time for those who have been put off in the past and subsequently missed out on better interest rates, perks and other offers from rival providers.
To make it as easy as possible to identify the financial institutions that offer the service, each current account provider will offer the Current Account Switch Guarantee, a Trustmark that will appear in branch, online and in supporting literature, and explain the benefits of the service.
It marks a significant milestone in the retail banking sector and should herald a time of greater clarity in the industry, explained Adrian Kamellard, chief executive of the Payments Council.
“There is now just one month to go until the launch of the Current Account Switch Service and as final preparations are made for launch, we look forward to a new era of account switching which will lead to greater choice for customers and wider competition in the marketplace,” he added.
It should also help to curb consumer dissatisfaction, as uSwitch figures show that 18% of customers are currently unhappy with the standard of service they receive from their current account provider.
Of these consumers, 54% cite excess charges as the biggest reason for their dissatisfaction, followed by poor interest rates (36%) and queues in local branches (21%); the latter being a particularly common gripe among customers of high street banks.
Michael Ossei, personal finance expert at uSwitch.com, said the competition for new customers will “heat up” in the coming weeks as the Current Account Switch Service deadline approaches.
Currently, First Direct increased its offering of £100 to £125 to switchers as an incentive, while Halifax is offering £100, though they are likely to be joined by other banks, building societies and providers as competition intensifies.
Bank account switching in time
Despite this, uSwitch figures show that 31% of consumers would not be motivated to switch current accounts for a cash incentive and instead rank financial stability as the most crucial factor in making the move – a sentiment expressed by three-quarters of current account customers.
“They want to know that their money is in safe hands, and this is proving to be more of a siren call than the charms of good service and value for money,” Mr Ossei explained.
“With the switching process set to become quicker and simpler, we hope to see more banks up their game and offer greater choice and service in order to win over those consumers now prepared to make the move.”
A full list of the 33 banks and building societies that will implement the Current Account Switch Service from September 16th is available here.