New report uncovers why we make little effort to switch household bills

With the new current account switching scheme about to launch on the 16th September, a report out from uSwitch.com, finds that the majority of consumers are aware that they can switch their household service providers, but 42% still make little or no effort to do so.
 
The report looks at attitudes towards switching ten essential household services, including bank accounts, mortgages, insurers and utilities, and identifies that awareness does not lead to action with many held back by fear factors, barriers and their own misconceptions. 95% of energy customers are aware they can switch, but less than four in ten (38%) have ever done so. Similarly, 94% know they can switch their bank/current account, but less than half (47%) have ever made the move. And this is not because consumers are happy. Across all household services, less than three in ten (28%) are put off switching because they are content with their current supplier.
 
Instead, consumers have strong perceptions about how easy or difficult it is to switch different household services and this impacts the likeliness of them making the move. Mortgages, digital TV and bank/current accounts are considered to be the most difficult, and all three rank as the least likely to be switched.
 
However, these perceptions are at odds with reality and, across the board, consumers over-estimate how difficult it is to switch. Six in ten mortgage customers (62%) assume switching is difficult, while three-quarters of those who have made the move found it easy (77%). Similarly, over four in ten (45%) perceive switching bank account to be difficult, but in reality 83% found it easy.
 
As well as weighing up how difficult switching is likely to be, consumers also consider the potential impact it could have on their lives if things go wrong. Bank accounts and mortgages fare particularly badly in this thought-process and, as a result, these customers need a greater reason or incentive to switch than others. Over four in ten (41%) require a chronic or very bad experience with their current bank account provider to make them switch, and it is a similar story with mortgages (36%).
 
But despite a bad experience being the tipping factor for many consumers, once they've decided to switch it all becomes about money. While 34% will switch their bank account to get better service, this is outweighed by the 66% who do so to save money. At the opposite end of the scale is car insurance where just 14% will switch to get better service, but 86% will do so to save money.
 
On average consumers will switch to save £100 a year. However, this rises to £177 a year for mortgages and £111 a year for energy suppliers.
 
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "Switching is a key weapon in every household's battle to keep bills under control. Unfortunately, what should be a simple solution has been placed ‘off-limits' with many consumers unwilling or unable to get past the barriers they perceive to be in the way.
 
"It's evident that a lot still needs to be done to help consumers feel confident to shop around for a better deal. At the moment they are being held back by a lack of education, support and encouragement. The new current account switching service is a step in the right direction, while both Ofgem and Ofcom are looking at how they can boost consumer engagement in energy and telecommunications. This is all good news, but it's clear from our report that there's still a very long way to go."