Monday, 27 February 2012

How to switch bank accounts remains a mystery

Last week a consumer market study was published on consumers' experiences with bank account switching (Consumer Market Study on the consumers' experiences with bank account switching with reference to the Common Principles on Bank Account Switching). Already in 2007 the European Commission discovered that banks don't enable consumers to easily move their accounts if they choose to do so and urged the Banking Industry Committee (EBIC) to remove existing barrierts to customer mobility. As a result, the EBIC esatblished a self regulatory initiative which was intended to bring clarity to consumers. Therefore, as of November 2009 it was supposed to be easier for consumers to change their bank account from a current bank to another bank (Changing your bank). In general, the consumers were only supposed to make a request to a new bank who would then, in theory, help the consumer through the switching process, transfer all standing orders and direct debits to the new bank etc. Unfortunately, the new study showed that this clarity was not achieved.

Only 19% of mystery shoppers were able to successfully open a bank account with a new bank and switch a standing order based on the process described in the new self-regulatory guidelines. Shoppers claimed that 71% of banks did not assist in the transfer, which meant that they did not follow self-regulatory guidelines, 7% took more than 14 working days to open an account or switch an order. The study also showed that bank staff was not always aware of switching accounts' procedures and that the level of information that consumers could receive about this varied significantly (14% consumers received no information at all).

EU Internal Market Commissioner Michel Barnier said "The results of the study published today explain why consumers change their banks so rarely. If consumers are not able to easily switch bank accounts, they cannot take advantage of better and cheaper banking services on offer elsewhere. The single market is thus deprived of the competitive drive that leads to innovation, cost savings and better quality banking services. This, in the long-run, can prove to be an obstacle to growth". (Consumers: Switching bank accounts - 8 out of 10 mystery shoppers faced difficulties)

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