35,000 Customers Ditch Banks Under New Regime
Around 35,000 British consumers moved their current accounts during the first week of a new industry switching regime aimed at promoting greater competition in the banking sector.
Sky News has learnt that the figure will be made public by the Payments Council, the industry body, on Thursday, as part of a statement saying that the new system appears to have been introduced without significant technical problems.
The seven-day switching system promises that banks will help customers change current account provider more easily by moving their direct debit and other payment arrangements to the new provider. It previously took as long as a month, triggering frequent complaints about poor service and deterring new entrants to the market.
The 35,000 figure represents a roughly 30% increase on the average of about 25,000 accounts being switched each week before the new system was introduced.
An insider said that the Payments Council was unlikely to suggest that the first week's figure would establish a benchmark for future switching activity, but said it was pleased with how the system had worked so far.
Between them, the five largest lenders account for an overwhelming share of the current account market, with last month's report by the Parliamentary Commission on Banking Standards criticising the industry's treatment of customers and the speed with which the Government has imposed change upon it.
The technology required to support the new switching system has cost approximately £750m.
If it is not judged to be successful, the Commission recommended that a full account portability model be considered, which banks have warned privately would cost many billions of pounds.
New entrants to the retail banking market have been buoyed by moves to ease onerous capital and liquidity requirements set by the industry regulator, but they have warned that these will be insufficient to trigger a genuine shift in the competitive landscape.
The major banks such as Barclays, Lloyds Banking Group and Royal Bank of Scotland are spending tens of millions of pounds on advertising and new customer offers in a bid to win and retain customers. Santander UK's 1-2-3 current account is understood to have been one of the biggest net beneficiaries during the first week of the new switching system.
The Payments Council declined to comment ahead of its announcement.