ICB ‘has bottled it’ over bank portability

In its final report, ICB chairman Sir John Vickers stopped short of such “portability” measures, which would allow customers to change providers quickly and easily.

Instead, the commission is proposing a 13‑month redirection service during which customers would suffer no losses if direct debits, standing orders and other payments went missing.

However, Simon Culhane, chief executive of the Chartered Institute for Securities & Investment (CISI), a respected City body specialising in financial exams and ethics, has hit out at what some critics of the ICB have called an “inadequate halfway house”.

“To put it mildly, Vickers ‘bottled’ it. He and his colleagues missed a trick in allowing the banking lobby to, at least for now, kick what is a highly important issue of easy bank portability in accounts into the long grass,” Culhane said.

“Switching rates among businesses and personal customers in the UK is still very low because they recognise under the current system of non‑portability of accounts a lot can go wrong.”

The CISI boss was unimpressed by the idea of a redirection service. He cited the poor performance of such a scheme when it was introduced by Holland’s banking industry in 2004.

“Redirection in banking is like moving house. It works for a while and then something slips through,” he said.

Culhane added that a ruling by the European Union that the three million Lloyds customers who will eventually be transferred to a new owner through the sale of 630 branches should keep their sort codes and account numbers showed it was possible to have a UK‑system of account portability.

“If this significant advance was made nationwide, it would provide the biggest boost to real competition between the banks. In the UK, an individual is currently more likely to switch their spouse than their bank account,” he added.