Source: First direct
Nearly nine in ten Brits (87%) are unaware or confused about the changes being brought in to improve current account services and make it easier for them to switch¹, according to first direct.
The online bank has launched the 'Current Account Reforms Countdown Tracker' to regularly track consumer awareness of the current account changes due to be implemented by Q3 2013.²
The confusion surrounding the planned improvements to current account and switching services could perpetuate the reluctance to switch providers and prevent people from making the most of their finances, with nearly half of people (43%) saying they have never switched.
The survey of almost 2,500 UK adults found that under a quarter (23%) of those who expressed some knowledge of the current account reforms were able to correctly identify the proposed changes.
Only three in ten people know that banks will be required to introduce a redirection service for standing orders and direct debits to ensure payments continue to be made when a customer switches provider. Twenty nine per cent are aware that a seven-day time limit for switching a customer's account is to be introduced.
Figure 1. People's awareness of the current account changes - see attachment
Consumers' shaky knowledge of how they will benefit from the changes is concerning, given that Britons have a poor track record of switching even when it may be in their best interest. Forty three per cent of those surveyed have never switched current account provider and only 4% say they definitely will switch in the next two years. Despite this, nearly a quarter of people (23%) rate their satisfaction with their account at five out of ten or lower.
In terms of motivations for deciding to switch, the top reason given is one that will be introduced under the plans for improving current account service; 44% of people would be more likely to switch if banks could guarantee that all standing orders and direct debits will be switched without any hassle or delay. The second and third most popular reasons were complaints about people's existing account.
Top five factors most likely to cause customers to switch
44% - A guuse customers to switch
44% - A guarantee that all standing orders and direct debits will be switched without hassle or delay
29% - Charges being introduced by my current provider
27% - Poor customer service from my existing provider
27% - To receive a better interest rate
20% - Having a guarantee that my bank account will switch in a short timeframe
Thinking about the aspects of their main current account that are most important to them at the moment, 88% of those questioned said not being charged a monthly administration fee and 70% said the interest rate charged if the approved overdraft is used. Only half (51%) thought the benefits they received as part of the account were important, suggesting that people are largely focused on having the right service for managing their money.
Mark Mullen, CEO of first direct, comments: "As a nation, we have never been keen to switch current accounts, even when we are not fully satisfied with the service we are receiving, due to the time and effort we expect the process to take. However, the improvements to current account and switching services are set to help change this attitude, giving consumers the confidence to switch when this is the best option for them, and make managing finances easier and more transparent. It is important that people are made aware of the changes to enable them to take advantage of the benefits."
Younger generation more open to change
The older people are, the more likely they are to know about the changes planned to current account services, but the more likely they are to say they definitely won't switch. Thirty nine per cent of over 55 year olds will not switch in the next two years compared to 16% of 16-24 year olds.
The 16-24 year old age group is the most likely to consider switching (32%). They were most likely to switch for better interest rates (40% vs. 27% for older age groups), if a short timeframe were guaranteed (29%) and appreciated the offer of switching advice (18%).
The over 55s chose to open their first current account with a bank with a local branch (39%) or good reputation (25%) and were most likely to be tempted to switch as a result of issues with their current bank such as charges being introduced, poor customer service, or a local branch closing.