Your current account provider is probably rubbish value for money and you’d be better off switching banks. That’s the message the Competition and Markets Authority put out earlier this week.
The watchdog reportedly spent £5 million on a lengthy report that took ages to write, £5 million to do what I just did in one sentence that took seconds. Maybe the CMA should have hired me to pen the report and saved the taxpayer a fortune. But I digress.
Of course, the CMA is correct in its findings and consumers really should be more aware about the value their bank account offers them and the merits of switching. The savvy ones among us know that apathy never goes rewarded in any aspect of consumer behaviour – whether that’s where we buy our groceries, who supplies our energy or where we bank.
The report identified a few areas where it would like to see improvements. Disappointingly for some, breaking up the banks wasn’t one of the suggestions. Others included capping unauthorised overdraft charges and getting the banks to send customers text message alerts when they are about to trigger such charges. But, for me, the best suggestion was to allow comparison sites and banks to swap customer account information so that far more sophisticated comparison tools can be developed. It is already happening to some degree and making a difference.
Gocompare.com worked with the Government on something called ‘midata’, which has enabled bank customers to download a year’s worth of their account transactions in a simple spreadsheet. This can then be uploaded into Gocompare’s current account comparison tool to check which other accounts would offer them better value for money. It’s a huge step in the right direction.
I admit that I’m one of the millions of lazy bank customers who hasn’t bothered to switch current accounts recently. But I’m better than the other two-thirds who have never bothered to switch because I have changed once. I ditched my old Abbey student account just after Santander took over and it proved too flummoxing for them to update my address, let alone any other customer information. I’ve been with NatWest ever since.
Does it offer me value for money? Not really. When I first moved my current account and poorly-filled ISA over, I got a decent interest rate on the savings account and I earned rewards on my current account. Some months I did alright – making the odd tenner in points I could redeem at retailers I often shopped with or having the equivalent sum transferred straight back into my bank. But the ISA rate is now pretty appalling and the rewards scheme has been drastically pared back.
So surely it’s time for me to switch? I could hop over to Co-op, Halifax or First Direct and get a nice golden hello of up to £150. Or maybe I could open the paid-for Santander 123 account that comes with all manner of perks – including cashback on your direct debits and a generous in-credit interest rate.
I plugged my own midata file into the Gocompare tool and, sure enough, the accounts with the switching incentive came top of the list. I’d be nearly £200 better off a year with Co-op but surprisingly the Santander account actually wouldn’t be worth my while. That was really useful info.
But did I make the switch to Co-op or anywhere else? No. £200 a year works out at just £16.67 a month. I hate to think about how much I squander on lunch in work each month but that figure doesn’t come close. I realise this makes me a lazy consumer and one the CMA so desperately wants to shape up and switch. But I think I’ve got good reason to stay put for a while. I have several accounts with the same bank. I like its easy-to-use app that lets me see all my accounts in one place and transfer money between them in seconds. My local branch is across the road from the office and it’s always been quiet when I’ve popped in, and the customer service has been great.
I may be a lazy customer but I’m no fool. I completely agree with Sue Lewis, chair of the Financial Services Consumer Panel, who said: ‘The CMA’s analysis shows that the quality of products and services has almost no bearing on market share. In other words, producing better value products and services has no competitive advantage. This deep-seated problem is unlikely to be solved by relying on consumers to drive change. Many consumers don’t want to switch providers; they just want to be treated fairly by their existing bank.’
There might well be savings to be made by switching more regularly, and I’d love NatWest to treat me better. But I hardly think the CMA’s findings will be enough to make the millions like me jump ship any time soon.
Laura Whitcombe is knowledge and product editor at ThisisMoney.co.uk.
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