Bank customers could save an average of £70 a year by switching their current account to another provider, And heavy overdraft users - who'd benefit most from switching - are the least likely to do so, despite the fact they could save up to £260, according to a new report from the Competition and Markets Authority (CMA).
57% of people have been with their bank for more than 10 years
Despite innovations such as the seven-day switching service, customers are sticking with uncompetitive deals, concerned that moving to a new bank will be a complicated, time-consuming and risky. In fact, over half of consumers (57 per cent) have been with their bank for more than 10 years and over a third (37 per cent) for more than 20 years.
After an 18-month enquiry, the regulator concluded that the current account market is not working competitively as banks don’t have to work hard to compete for customers. Plus new products and new banks do not attract customers quickly enough.
It went on to say customers should be prompted by their bank to consider moving to another account or to change providers if their branch closes or if they are overcharged. However, its recommendations fell short of breaking up Britain’s mega-banks to encourage more competition.
Andrew Hagger of Moneycomms, said: "We may well have a slick and efficient current account switching mechanism in place, however until something is done to make it easier for people to compare accounts and identify one that matches the way they run their day to day finances people will remain reluctant to move banks.
"The crux of the problem is that people simply don't have the confidence to uproot their banking relationship because they don't know which account to move to - the array of different in credit and overdraft tariffs is so confusing many don't bother no matter how slick and polished the switch process has become.
"There is the Midata comparison tool, but how many people actually realise this exists? - a more straightforward comparison option such as traffic-light labelling would help people narrow down their search for a new bank account at a glance."
- Find out how easy it is to switch current accounts here.