Business

New government move to boost account switching

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The government has set out a series of ways to make it easier for people to switch providers - for energy, bank accounts or telecoms.

It comes as the Competition and Markets Authority (CMA) said not enough people are switching their current accounts.

After an 18-month study, the CMA concluded that only 3% of customers moved account in 2014.

The government said consumers should have better access to their personal data, to help them change supplier.

And it launched a public consultation, to see how switching rates can be improved.

Switching rates

In the last 12 months, the number of people in the UK switching their bank account has fallen by 14%, according to figures.

In the year to September 2015, the Current Account Switching Service (CASS) said 1.03 million had changed provider.

That is little more than were switching before September 2013, when the seven-day switching service was launched.

The CMA previously said that only 8% of consumers had switched accounts in the last three years, compared with 45% of consumers who had switched car insurance provider.

Public consultation

The Department for Business, Innovation and Skills (BIS) published new "principles "for switching, including:

  • Switching should be free for consumers, in most cases
  • The process should be quick and should happen on an approved date
  • Price comparison sites should make it clear what payments they receive from suppliers
  • Customers should have access to their consumption or transaction data, which they can take to price comparison sites.

Most of the large banks already offer a service known as Midata. This enables account holders to see a summary of all their transactions, as well as the charges they have paid.

Barclays, HSBC, Lloyds, Nationwide, RBS, Santander and Tesco Bank provide such downloads to their customers.

The data can then be used on a price comparison site, Gocompare, to make switching easier.

In addition, Tesco Bank tells customers what interest they would have earned, had they put their money in a savings account rather than leaving it in a current account.

Consumers are now being asked for their own ideas on how switching could be improved. The consultation ends on 4 December.

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