Jeff Salway: Banks don’t deserve our loyalty

IF ANYONE is deserving of our loyalty, it is surely our high street banks. And that loyalty is unstinting, judging by our refusal to be swayed by various scandals and outrages into taking our business elsewhere.

What other conclusions can be drawn from our refusal to switch current accounts in the face of compelling (and ever-growing) evidence that they don’t want or merit our custom.

The average Scot has had the same current account for 19 years, with more than one in four still using the first current account they opened, according to Payments Council research, making bank customers north of the Border the most loyal in the UK.

So it must be my memory deceiving me when I think back to the banking crisis and the fury aroused by the incompetents (at best) that had mismanaged Scotland’s once great banks into state control. If that were not enough, perhaps the payment protection insurance (PPI) scandal would have been the final straw. How about the Libor scandal? Nope, still not enough.

Why not? One theory is that it’s too hard to switch, or at least not worth the hassle. It currently takes an average of 18 working days to switch account, with some transfers taking up to 30 days.

That’s why a new seven-day switching rule is being introduced tomorrow, with a guarantee that all regular payments will be transferred across in that time and customers covered for any losses arising from problems during the process.

Will this spark a belated switching frenzy and improve competition in the market? Some believe it will, typically those who point at switching levels in other markets.

While the changes taking effect tomorrow will encourage more people to switch, suggestions that it alone will make banks more competitive are wide of the mark. Have energy suppliers raised their game and become more responsive to customer needs in the face of high switching levels? Very evidently not, is the simple answer.

But the seven-day rule is one of several changes that may in the long run shake the big players out of their complacency. Another came earlier this year when the regulator told packaged current account providers to make it clearer to customers what they get for their money.

Over the coming year, we’ll also see more “challenger” banks launch current accounts, some of whom have been waiting for the seven-day rule to bed down before making their move.

Yet there’s a lot to overcome. Perversely, it’s the bad management, dishonesty and rotten culture of the banks that’s ultimately prevented greater switching. People don’t trust them to do it properly, for a start, while there’s a misconception that they’re all as bad as each other.

The truth is that without a genuinely game-changing challenge – from one of the global internet giants perhaps – it’s unlikely much will change anytime soon, because our apathy is the biggest obstacle.

In that sense, it may just be that we get the banks that we deserve.