Government plans to fine banks unless they help customers switch to rivals drew criticism from all corners of the banking sector yesterday, with HSBC Holdings querying the data used to draft the proposals and Halifax saying the proposals did not go far enough.
In her long-awaited review of the financial services industry's voluntary codes of practice, DeAnne Julius, the former Bank of England monetary policy committee member, recommended that a bank should pay a customer £50 if it failed to provide a credit history to a rival bank within five days. The process of switching a current account to a rival would have to be completed within five weeks of that. Some analysts said the target was unrealistic.
Ms Julius said current accounts defined customers' relationships with banks. "Customers are reluctant to change current accounts even when they are dissatisfied, because of the hassle factor," she said.
She also recommended that banks provide customers with annual statements of interest and other charges.
It was up to the industry to rank banks in categories as to their degree of compliance with the recommendations.
Halifax will lobby MPs to introduce a private member's Bill to make the code law today. "A voluntary code is not enough and these proposals do not contain enough to encourage third parties, such as utilities, to hasten current account switching," a spokesman said.
By contrast HSBC, one of the so-called Big Four banks that have come under fire for benefiting from customer inertia, warned that Ms Julius's recommendations were likely to generate excessive paperwork that would be against consumers' interests. "Where we have a problem is with the figures used in the report," a spokesman added.
Ms Julius's report was the product of Don Cruickshank's review of the banking sector published last year.Reuse content