New regulations introduced back in September last year about switching have resulted in the number of people changing bank account holder soaring in the last quarter of 2013, the Payments council has revealed.
In a comprehensive analysis of the current account market during the last three months of 2013, it found that a monumental 306,240 people switched account between September and December, representing a 17% increase from the same period in 2012.
And the Paymentís Council has attributed the high number to the new switching policy that has allowed customers to transfer to a new bank account within 7 working days, with the added insurance that all of their existing paymentís will be redirected and that they will be given financial protection if any problems arise.
The move was implemented last autumn in order to create more competition in the current account market and expand the market beyond Lloyds, RBS, Barclays and HSBC. Many financial bodies have identified that a lack of competition in the market has enabled some of the countryís leading brands to get away with mis-selling insurance and offering high interest hedge products, which they have all re-compensated over the course of the past few years.
However, the move has clearly been a success in achieving what it set up, with the number of transfers totalling over 300,000 in just 3 months, and more people expected in the first months of this year.
Furthermore, the Paymentís council said that just 60% of people were actually aware of the new policy, and hope to enhance its reputation moving forward in the future.
"More than 300,000 switches in three months is an encouraging start and we hope this will be further boosted by the second wave of our national advertising campaign that kicked off this January," said the Payments Council's Chief
Executive Adrian Kamellar.
How the new system affects you
Introduced in Mid-September last year, the current account switch guarantee was implemented in order to make the process of switching to a more competitive deal far easier. The change has meant that anyone who desires to switch bank account provider can do so within 7 working days, and this includes transferring all standing orders, direct debit payments, and other financial transactions. Furthermore, all customers are given a guarantee that they will be protected from any monetary loss if any complications or difficulty arise during the transfer period.
The greatest upshot of this policy isnít the new found convenience that consumers are enjoying with their current accounts, but that it should introduce a vaster array of competition within the market which should mean that banks offer more attractive deals from now on. The simplicity of switching means that you can now move straight away to a cheaper deal if, say, your limited term off rate comes to an end and you are placed onto your existing providers more expensive current rate. You can then look around the market, find the best current account for you with the greatest incentives, and then transfer within 7 days without having to worry about any problems arising from previously set up payments.
Michael Ossei, leading finance expert summarised the impact of the policy, citing:
ìWe're really encouraged by these figures - consumers are finally feeling confident enough to break free from the shackles of their old banks and move to a better deal.
"And, with cash incentives of up to £100 on offer as well as interest rates of up to 5% on in-credit balances, people have everything to gain by switching their current account. We've seen consumers on our website express the most interest in the First Direct 1st Account and the Halifax Reward account.
"The challenge facing the industry now is how to make competition work harder. Instead of the Big Four - Barclays, HSBC, Lloyds and RBS - winning customers thanks to their hefty advertising budgets, we want to see the likes to TSB, Tesco, the Post Office and Metro Bank gaining a larger share of the market."
Compare Current Accounts with MoneyExpert.