High-street banks attacked over account switching policy
Monday 10 October 2011
The Independent Commission on Banking (ICB) is under attack for failing to push for portable bank accounts – a basic reform that campaigners say would free consumers to switch banks and increase the efficiency of the wider economy.
As well as making the financial system safer, the ICB's remit included encouraging competition and consumer choice. But the commission barely touched on the idea of letting bank customers transport their account number if they switch account.
Pressure for the banks to treat consumers better will also increase today with the Treasury Select Committee's call for Royal Bank of Scotland and Lloyds Banking Group to stop restricting basic account holders' access to other banks' cash machines.
Which? argues that the ICB should have carried out a full analysis of the costs and benefits of portable accounts – not just for banks and consumers but for businesses and the Government. The consumer campaign group points out that every time someone changes bank account, government departments such as the Department for Work and Pensions and businesses incur costs and hassle in making sure direct debits are switched properly.
Dominic Lindley, a policy adviser at Which?, said: "Although portable accounts would have costs for the banks, there would be benefits for every business in the country, for government departments and, of course, for consumers because it would be far less likely for things to go wrong. "No one in business or the Government has really picked up on how much it costs when people switch bank accounts. No one has done proper cost-benefit analysis for a long-term plan."
Instead of calling for portable accounts, the ICB recommended a redirection service. Which? says this will help smooth switching but will do little to reduce costs or overcome people's wariness about the potential for things to go wrong when changing banks. Its survey of consumers found that 43 per cent would be more likely to switch their current account if they could keep the same account number.
Which? argues that the banks will sit back unless they are forced to make changes by a regulator. Mr Lindley said he hoped the new Financial Conduct Agency, due for launch by early 2013 with encouraging competition as part of its remit, will look at the issue.
The financial crisis and reform efforts have turned attention not only to banks' risky practices but also to their treatment of banking customers.
The chairman of the Treasury Select Committee has today written to Royal Bank of Scotland and Lloyds Banking Group raising concerns about their decisions not to let basic account holders use other banks' cash machines.
Andrew Tyrie, chairman of the committee, said: "This change threatens to leave many basic account holders at the two banks unable to access most cash machines in the UK. This could also signal the end of universal access to cash machines for all customers."
RBS announced its plan to restrict cash machine use for basic account customers in August. Lloyds already had limits in place.
- 1 I've been called an abusive and dangerous parent, when all I did was listen to my transgender child
- 2 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 3 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 4 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 5 UK weather: Britain braced for snow to replace sun as arctic air mass moves in
Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
Russian hack of President Obama's emails worse than previously admitted
Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
UK weather: Britain braced for snow to replace sun as arctic air mass moves in
Nepal earthquake: US Pastor Tony Miano sparks outcry by suggesting Nepalis should convert and not rebuild their 'pagan shrines'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...