Unhappy bank consumers still won't switch current accounts

Three quarters of consumers have never even considered switching current accounts, research has shown.

Just 7% of consumers have switched their current account in the last two years, according to Consumer Focus. And although a further 17% said they had thought about switching they had not actually done so, despite nearly a third claiming they are unhappy with their bank.

This compares to 31% of consumers who have switched their energy supplier in the past two years, 26% their telecoms provider and 22% their home insurance company.

Why aren't consumers switching?

The main reasons consumers are reluctant to switch current accounts are the hassle involved with going through the switching process and fear that switching will harm their credit rating.

Many also felt there was little difference between the banks and that switching would bring few, if any, benefits.

What’s more, figures show nearly half of consumers who do decide to switch experience problems, with many reporting difficulties in transferring direct debits to the new account.

Why should consumers switch?

James Daley, spokeperson for consumer group Which?, said the main reason for switching your current account is customer service. 'Good service will make your life so much easier',' he said.

However, Daley also pointed out that these days customers can get paid for switching current accounts. Both First Direct and Santander are renowned for offering customers a £100 cash bonus in return for switching to their current account. 'There are also better interest rates to be found out there,' he added.

In recent weeks many of the big banks, including Natwest, Royal Bank of Scotland and Santander, have stopped paying any interest on their current accounts. In fact according to Moneyfacts, more than half of the current accounts on the market now do not pay consumers a penny in interest, while a further 28% pay 0.1% or less.

Sarah Brooks, head of financial services at Consumer Focus, said: ‘Until more people are prepared to vote with their feet, there will not be enough pressure on banks to improve their performance. Complaints against banks are persistently at an unacceptably high level. We need to promote switching and make it less error prone if we are to force the banks to raise their game’.

‘Banks must be fair and upfront about their charges so consumers can make informed choices about which bank offers the best deal. Until consumers see the value in switching and can do so simply, quickly and with no errors, the industry can’t be considered truly competitive,’ she added.

The British Bankers’ Association (BBA) however said: ‘Just last week the Office of Fair Trading (OFT) published an up to date report showing that instances where customers experienced problems with switching have fallen dramatically. The report also showed that satisfaction levels with the switching process are currently running at 85%’.