Five questions on: Switching current accounts

 

It's getting easier to do so, isn't it?

The current account switching service launched in autumn 2013 has made it easier to move. The vast majority of switches are completed within the prescribed seven-day period and without errors being made, the Financial Conduct Authority (FCA) reported this week.

It's all good then?

Not really. The City watchdog also warned that there is a general lack of consumer awareness and confidence about the current account switching service, leading to millions not bothering to move bank accounts to get a better deal.

Why is that?

People are worried about something going wrong with the switching service, such as payments not being redirected properly to a new account number, the FCA said.

Has it got a solution?

Account number portability could help to reduce the fears, it said. More of us would switch current accounts if we could take our old account number with us. The FCA said there were various technical solutions to delivering account number portability, but that the Payment Systems Regulator, a newly formed body, would consider the evidence.

Is it the right answer?

Only partly. In fact the biggest barrier to switching is confusion, as people simply can't work out which is the best deal. "Confusion reigns, – with banks between them offering a myriad of different charging tariffs, some with daily fees, some interest charges, some monthly fees and some a mixture of these," pointed out Andrew Hagger of the personal finance site Moneycomms.co.uk. "It's no wonder people are staying put. Despite increased use of upfront sweeteners, switching activity remains subdued, and until something is done to make current account comparisons easier, this won't change."

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