The current account switching service, launched on September 16, has made “a great start”, according to the body behind it. Campaigners, however, argue that it is experiencing “teething problems”.
The Payments Council announced on Thursday that the service was operating smoothly, with figures showing that more than 35,000 people had started to switch their account since its launch.
This number represents an increase of around 30% from the average of 25,000 accounts being switched each week before the new system was introduced. The official switching figures for the first month of the service will be published around October 21.
Adrian Kamellard, CEO of the Payments Council, said, “Although it is too early to tell what switching levels will be over the longer term, interest in the new service has clearly got off to a great start.”
However, Laura Willoughby of campaign group Move Your Money said that the service is experiencing a number of issues, from problems with utility providers to banks refusing transfer requests because of missing information.
“What’s really becoming clear is that it’s still more than seven days”, she said.
“The guarantee gives people some reassurance but there’s certainly some teething issues that have come through.”
It was hoped by the government and by campaigners that the service would increase competition in the market and loosen the grip of the big banks that dominate the market. The figures are not yet available to say whether this is the case, but Willoughby argued that the service alone will is insufficient as customers can only choose between “the same bad old banks.”
She said, “I think its important to say that this isn’t enough to suggest that it will increase competition in banking, as there’s still not enough entrants or current account providers in the system to make that possible. The government still needs to deal with the issues around the payment system, which is blocking new banks and current banks from offering current accounts.”
Thirty-three banks and building societies now offer this £750m government-backed service, with more expected to follow next year. However, many ethical alternatives do not presently offer current account services.
“The bottom line from us is that of course it’s brilliant, of course it’s great, but there are some teething problems and this should have been happening all along”, Willoughby added.
“It’s certainly not enough to create the competition that people want to see, because once people are looking to switch accounts, they don’t have much choice. When we get that choice, the real switch up will happen.”