Lack of awareness and confidence hampering UK account switching service

Lack of awareness and confidence hampering UK account switching service

The UK's current account switching service (Cass) has failed to produce a significant increase in the number of people moving banks, according to the Financial Conduct Authority (FCA), which says that a move to full account number portability could prove a more effective approach.

Introduced in September 2013, the current account switching service was designed to make it easier and quicker for Brits to move their bank provider, boosting competition. The service, which cost the industry in the region of $750 million, was recommended by the Independent Commission on Banking, which had originally looked at full account number portability, which would have cost anything up to £5 billion.

Data from the Payments Council - the bank trade body in charge of the service - suggests that switches using the new system almost always go without a hitch and within the seven day timeline. In addition, satisfaction among users - both consumers and SMEs - is high.

However, uptake has been unspectacular. Over the first 12 months of Cass's existence there was a 22% increase in switching volumes. But since then volumes have fallen back, and by January were only 16% higher than when the service was launched and a measly two per cent up on the pre-Cass peak.

The disappointing take-up is largely down to a lack of awareness of and confidence in the system, says the FCA. Although the Payments Council recently claimed that 69% of consumers were aware of Cass, the FCA's own research found just 41% were. Meanwhile, the biggest fear among potential switchers is that something will go wrong during the move. To address this, the FCA is recommending a targeted marketing campaign to publicise the high level of satisfaction among users.

With awareness, confidence and a general inertia among the public the main reason for a lack of take-up, the FCA has rejected the idea - floated by George Osborne - of cutting the switching time from seven to five days, concluding that this would not address the problem.

A more dramatic and expensive alternative would be a switch to full account portability, letting customers keep their account numbers and sort codes after moving provider. This is attractive to a "significant minority" of people, says the FCA, and would increase confidence in a smooth, error-free switch.

The FCA report floats two potential models for delivering account portability: building it within the existing market structure and then running the additional infrastructure centrally, as is the case with Cass; or a new central utility model based on a shared platform.

The second idea may "provide an opportunity for investment in a new operating system, but it is not clear what incentives a single utility (effectively in a monopoly position) would have to either keep pressure on costs or to innovate in the longer term. This model might also make it more difficult or slower for innovation to occur at the individual bank level (eg if there was inflexibility in the central solution or banks had to queue up for development slots). However, it could also provide a common access platform for challengers."

The FCA says that it is now passing on its work to the new Payment System Regulator, which is setting up a forum to develop strategic priorities for the industry.

Read the full report:

Download the document now 928.7 kb (PDF File)

Comments: (6)

Richard Sanders
Richard Sanders - Hermosa Consulting - Southend on Sea 13 March, 2015, 09:17Be the first to give this comment the thumbs up 0 likes

Its not really surprising awareness is low really, banks promoting the service would be like Turkeys voting for Christmas!

Full account number portability is a major step - and the real question is how important is this? It would be interesting to see some research on how many people know their sort code and account number and to ask them why that would be so vital for them to retain it if all directy debits etc were automatically switched if they changed bank.

The FCA and new PSR have to be careful they do not get railroaded into projects and investigations that are really peripheral to the functioning of UK Payments.

The effect of the interchange caps being imposed by Europe should perhaps be more worrying for them.


Tom Hay
Tom Hay - Payment Systems Europe - London 13 March, 2015, 09:52Be the first to give this comment the thumbs up 0 likes

CASS is a resounding failure. The number of switchers is actually a side-issue; the real question is whether it has increased competition among banks, and hence benefited consumers in terms of improved service and reduced costs. The FCA report confirms that neither of those has happened. It has had only a ‘limited impact on supplier behaviour to date’, most notably a temporary increase in advertising expenditure around the launch of the service. Meanwhile, the average level of customer satisfaction is ‘generally high and has not changed greatly over time.’ Ultimately the £750 million spent on this failed experiment has to be paid by the banks’ customers, so the costs of their banking will increase rather than decrease.

CASS is a failure because it is based the faulty premises that a) there is a high level of customer dissatisfaction with their current accounts and b) this dissatisfaction would drive consumers to shop around if only the switching process were easier. Now that the money is already spent, the FCA report admits that in fact the overwhelming majority of consumers are fairly, very or extremely satisfied with their current accounts, and that further simplification of the switching process would not bring significant consumer benefit.

Unfortunately the policy is based on ideology and is impervious to this kind of rational consideration, so instead of admitting that CASS was a mistake based on flawed assumptions, the response is to throw more good money after bad. Spending the obscenely large amount of £5 billion on account number portability will benefit no-one except the IT firms and consultancies, and once again the banks’ customers will end up footing the bill. The government should allow the banks to apply that money directly to enhancing services and cutting costs to consumers, and encourage competition by removing red tape instead of creating white elephants.


A Finextra member
A Finextra member 13 March, 2015, 14:011 like 1 like

Is it also not simply linked to the fact that one of the first questions you are asked when you apply for a mortgage/loan is who do you currently bank with and for how long have you held your main account there? People are not switching accounts, not because of complexity or lack of awareness but rather fear of losing the 'x' years history and impacting their credit score.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 March, 2015, 16:37Be the first to give this comment the thumbs up 0 likes

Today's world of tech savvy customers would Google for "HSBC / Barclays / RBS s***s" or something like that if they were really dissatisfied with their current bank. When I did just that, the CASS website didn't show up on the first page of the search results. When I tried "Switch bank account", I did see entries from individual banks (e.g. Switch to Santander) but again no mention of CASS. It was only when I searched for “CASS” that the CASS website showed up but what're the chances that someone unaware of CASS would search for CASS? The digital marketer in me thinks there’s a massive scope to increase awareness of CASS by injecting some SEO juice into its website.

In return for this free advice, I hope FCA / PC will reward the IT marketer in me by spending a lot of moolah to take CASS to the next level. I agree with @TomH that this will be the most direct impact of expanding the scope of CASS.


Tom Hay
Tom Hay - Payment Systems Europe - London 13 March, 2015, 17:50Be the first to give this comment the thumbs up 0 likes

Ketharaman, according to the report there were an additional 216,000 switches in the first year of operation. Even assuming the increase is all due to CASS, and that the same level of increase is maintained for 5 years, it will have cost around £750 per additional switch. It would have been better to spend money marketing the existing switching service than financing a new IT build. Even stopping people in the street and offering them £500 each to switch their account would have been more cost-effective! 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 March, 2015, 18:06Be the first to give this comment the thumbs up 0 likes

@TomH: Ha ha. As an IT marketer, I'd have protested at such a streetside solicitation strategy instead of building a new IT solution but, as a bank customer, I'd have made sure to strategically position myself at 3-4 different street corners so that I could pocket £500 at each one of them:).