One in five “considering switching current account”

Around one in five current account customers are considering investigating new providers, according to research from Consumer Intelligence.

The study shows 18% are planning to investigate alternative accounts in the near future.  The study, which comes ahead of the introduction of the Payments Council’s new switching service this September, shows strong demand for switching. The new service will guarantee to automatically move incoming payments to the new account and ensures the move will take no more than seven working days.

However, when asked what would be likely to spur them into switching current accounts 82% said they would be likely to if ATM charges were introduced; 80% if obligatory monthly charges were added and 69% if they weren’t happy with the handling of a complaint. Guaranteed switching within 7 days was way down the list in twelfth with 32% saying it would be likely to make them consider switching their current account.

But Consumer Intelligence’s research shows two thirds (64%) of current account customers have been with their bank for five years or more. Around 20% have been with their provider for more than 20 years while 23% have had their account for between 10 and 20 years.

The main reason which would be most likely to encourage them to leave their existing provider would be issues with overdraft fees, charges or interest rates which was chosen by 22% ahead of being unhappy with how a complaint is handled which was chosen by 18% and 14% who would move if they were refused an overdraft, loan or other credit product..

David Black of Consumer Intelligence said: “The launch of the Payments Council switching service in September will be a landmark for the banking industry and it is good news for all those who want to switch. However it is clear that there are other factors which have a much greater impact on consumers’ propensity to switch.

“It is clear that current account customers are reluctant to switch at the moment with 64% sticking with their provider for five years or more and many have stayed with their provider for 20 years or more. The old saying about people being more likely to divorce than leave their bank has some truth to it.

“The main drivers for changing are service, interest rates and charges so it will be interesting to see how existing competitors and new competitors such as Tesco or Virgin Money position themselves.”