Less than a third of consumers are aware of the system that makes it quick and easy for them to change which bank they use, according to research from TSB Bank.
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The bank said the Competition and Markets Authority (CMA) needs to do more to raise awareness of the system that people in the UK can use to make changing current accounts easy.
In reaction to a lack of competition in the banking sector, as well as unhappy consumers, the Banking Commission introduced a regulation in 2013 to simplify and speed up the process of changing bank account providers. The Current Account Switching Service (CASS) reduced the time taken from 30 to seven days.
According to TSB, only 28% of people are aware of the service – four years after the introduction of the regulation.
This is an example of an IT system being underutilised due to a lack of communication with the target users, with the number of people that used the system to switch accounts in the past year lower than the year before.
Furthermore, the bank’s research found that despite the arrival and increasing visibility of challenger banks in the UK, 68% of people think there is less competition in the banking sector than a year ago.
TSB, which has seen itself as a bit of a challenger bank in the UK since its acquisition by Spanish bank Sabadell in 2015, said the CMA has failed to encourage consumers to shop around for a bank account.
“The CMA’s attempt to fix the industry and get consumers a better deal has failed and banking is still not working in the interest of consumers. The big banks continue to have a stranglehold on the market – they are taking customers for granted, trapping them on poor deals and making it impossible to switch,” said TSB.
Paul Pester, CEO at TSB, said part of the problem is that consumers do not understand the benefits they can get by switching accounts.
TSB research found that 41% of people believe it’s difficult to make an informed choice when switching, 38% can’t see any benefits in switching, and 28% think all products are the same.
“All customers need to be made aware of their right to switch banks. All banks should be required to promote the existence of the CASS to customers – explaining how switching is easy,” said TSB.
The technology platform to make it easy is there – CASS is a centralised system, built by Vocalink, which makes sure all payments made to the old account will be redirected to the new account. This ensures payments will not be lost if old account details are used in error.
The service operates on a custom-developed IT platform based on the ISO 20022 specification. The two-year project to build it cost £750m, including central IT changes and those of participants as well as marketing.