You are here: Home - Saving-Banking - News -

‘Trapped’ consumers miss out on £10m by not switching banks

0
Written by: Paloma Kubiak
09/08/2017
A year on from a major investigation into competition in the banking industry has had little impact as consumers miss out on £70 each by not switching to a more suitable current account.

In the 12 months since the Competition and Markets Authority (CMA) published the findings of its three-year-long investigation into retail banking, the number of people switching bank accounts has fallen 14%.

That’s nearly 150,000 fewer people switching. Given that the average person could be £70 off better by switching, that’s a collective £10m in savings that consumers are missing out on, according to TSB.

The bank’s own research found only 28% of people have heard of the Current Account Switch Service (CASS) which guarantees the process will be done in seven days, and 47% have never switched current account. Nearly a quarter (23%) haven’t switched in more than 10 years.

Further, 41% of people believe it’s difficult to make an informed choice when switching, 38% said they can’t see any benefits in switching bank account and 28% said ‘all products are the same’.

TSB said the big banks continue to have a stranglehold on the market, and are taking their customers for granted. The ‘Challenger’ bank also accused its rivals of trapping customers on poor deals and making it difficult to switch.

Paul Pester, CEO at TSB, said: “The CMA had a golden opportunity to fix the industry, by enabling consumers to make informed choices about their banking and ultimately putting them in control. But one year on and its attempt to get consumers a better deal has failed. People are still missing out on the benefits of switching – to the tune of another £10 million in the past 12 months.”

As such, it’s reiterating three recommendations to make the banking sector work:

  1. Customers need to know what they’re paying for their banking. Banks should tell customers how much they’ve paid each month through a monthly bill.  This will lead to greater understanding of products and prompt them to shop around for a better deal.
  2. The industry needs to create a solution so all customers can switch their bank account, particularly overdraft users who stand to gain the most from switching, saving £260 a year on average – but are least likely to switch. A “credit passport” should be developed which customers can take to their potential new bank.
  3. Customers need to be made aware of their right to switch banks.  All banks should promote the existence of the CASS and explain how switching is easy.

Pester, added: “In a truly competitive market, consumers will be offered genuine choice and a level of transparency they’ve never seen before, so they can make informed choices and switch with ease.  Only then will consumers be empowered to vote with their feet and get a better deal.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

Your rights for refunds if travel is affected by strikes

There have been a wave of strikes this year across many different industries, and more are planned over Christ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week