Bank standards kept low by customer inertia

CURRENT account users will continue to suffer poor service from their banks unless it is made easier and quicker for them to switch provider, a leading consumer body claims today.

Research by Consumer Focus reveals that three-quarters of consumers have never considered switching their current account to another bank. A further 17 per cent of people - about eight million bank customers - have thought about switching but been deterred by the perceived hassle, fear of things going wrong and concerns about the potential impact on their credit record.

The study supports those concerns, showing that 44 per cent of people who have switched experienced problems during the process, with more than a quarter having issues with direct debit transfers.

Consumers are considerably less likely to vote with their feet when they are disillusioned with their bank than in other sectors. The study found that only 7 per cent of people have switched current accounts in the past two years - 31 per cent have changed energy supplier and 26 per cent have switched telecoms provider.

Sarah Brooks, head of financial services at Consumer Focus, said too many people were unwilling to switch even when their bank had let them down.

"Until more people are prepared to vote with their feet, there will not be enough pressure on banks to improve their performance," she said.

"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."

Brooks called on banks to be more up-front about their charges to help people compare accounts and understand the real costs.

"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 said.

But the British Bankers' Association (BBA) hit back at the report, citing an Office of Fair Trading report last week suggesting problems with switching processes had fallen significantly.

"The report also showed that satisfaction levels with the switching process are running at 85 per cent," said the BBA. "Where customers do want to switch banks, it's easy to do so and the new bank will take care of all the paperwork."

It added that most customers get fee-free banking just by keeping their account in credit. But several high street banks have scrapped paying in-credit interest, according to Moneyfacts, which said 55 per cent of current accounts pay no credit interest, while 28 per cent pay 0.1 per cent or less.

NatWest and RBS have ceased paying in-credit interest in recent weeks, while Barclays, HSBC and Co-operative Bank are among the other providers that no longer pay credit interest on current accounts.