UK account switching service fails to take off
22 July 2015 | 8112 views | 9
The UK's current account switching service (Cass) has failed to shake up the banking market, prompting a measly four per cent increase in the number of people moving providers over the last year.
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.
Over the first 12 months of Cass's existence there was a 22% increase in switching volumes but momentum has stalled, with 1.1 million switches in the last year, up slightly from 1.06 million the year before.
Earlier this year the Financial Conduct Authority (FCA) bemoaned the disappointing take-up, blaming it on a lack of awareness of and confidence in the system. Although Bacs says that 69% of consumers are aware of Cass, the FCA's own research found just 41% are.
In the last month both Lloyds and Halifax have released online tools designed to make the process of moving provider even easier but regulators and politicians are still weighing up a move 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 has floated 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 work has now been passed on to the new Payments System Regulator.