More than 600,000 people have changed their current account provider in the first six months of a scheme designed to make switching banks easier, a rise of 14 per cent on the same period a year ago.
According to the Payments Council, which oversees the scheme, called the Current Account Switch Service, two-thirds of people with current accounts are now aware that they can switch banks easily but, given that there are 46 million such people in the UK, switching levels remain relatively low.
Under the rules of the scheme, current account holders can move banks within seven days, as opposed to the 30 days it used to take, and the switching guarantee means that the new bank or building society has to arrange for the transfer of all existing incoming and outgoing payments to the new account.
The Payments Council claims that the new service takes away the “fear factor” from switching accounts and also helps to foster competition among account providers, thereby giving customers more choice.
However, critics say that the low uptake would suggest that the service is not the game-changer promised, so is not significantly increasing competition in banking.
In addition, while many new accounts look tempting, often offering a range of incentives from interest on balances to one-off cash payments, there can be hidden problems, such as high overdraft charges.
Also, in order to benefit from the higher rates of interest on offer, customers will have to meet the minimum funding requirements or other terms and conditions, so they should read all the available small print before they make the decision to switch.