Millions still unhappy with their banks
...but most of us never switch
- More than 10 million people are unhappy with, or ambivalent about, their current account
- The switching market has seen no significant increase in the last five years
- Half of people stay loyal to the same bank for life
- It’s easier than ever to borrow - three quarters of us have an overdraft arranged, compared with only a third in 1996
A quarter (26 per cent) of current account holders, which equates to more than 10 million people1, are unhappy with or ambivalent about their account, yet still very few get round to switching banks. The findings come from the Abbey Banking Report, an in-depth study into the current account market. Despite fierce competition in the current account market, around a third (31 per cent) of people have banked with the same institution for more than 20 years and almost half (46 per cent) have stayed loyal to the same account for life. It may therefore come as no surprise that the rate of switching has remained flat for the past five years. More than a quarter (27 per cent) have considered moving, but the switcher market may represent as little as one per cent of the total number of current accounts in the market. The biggest reason for dissatisfaction is unfair treatment, with more than half (57 per cent) of those who are unhappy citing this as their biggest aggravation. When asked about how unfair treatment manifests itself, almost half (49 per cent) say it’s a lack of flexibility with their overdraft which angers them most, almost as many (45 per cent) think charges are too high, and a third (32 per cent) feel that their complaints are not dealt with satisfactorily. One in three think switching is stressful - 90 per cent of switchers disagree. According to Abbey’s research, inertia is rife because of the perceived hassle of switching. A third (35 per cent) think that, next to moving house, switching current accounts must be one of the most stressful things you can do and four fifths (82 per cent) say it would cause too much hassle and inconvenience. But Abbey’s research shows that 90 per cent of people who have jumped ship found the process easy, so much that a quarter (23 per cent) have switched more than once. Hobson’s choice also plays a part in putting people off switching. More than half (59 per cent) don’t bother moving accounts because they think that all banks are the same. Rip-off overdraft charges Abbey’s Banking Report also reflects the UK’s growing reliance on borrowing. Three in four (75 per cent) now have an overdraft facility available to use, compared with only one in three (34 per cent) in 1996. But it’s the charges for borrowing that annoy people most. Over half of respondents (54 per cent) feel that their bank’s charges are excessive, particularly when it comes to unauthorised borrowing. Nine in ten (89 per cent) think their bank should be more lenient and not charge for one-off mistakes that push them into unauthorised overdraft. However, as Abbey’s table shows, charges vary considerably and very few banks give people the flexibility they would like. | Bank account | Potential cost for a single mistake when a bank pays the item taking a customer into unauthorised overdraft borrowing | | Abbey account | £0* | | Halifax current account | £58
(£28 unauthorised overdraft fee + £30 paid transaction fee) | | Nationwide current account | £36.50
(£15 unauthorised overdraft fee + £21.50 paid transaction fee) | | NatWest current account | £58
(£15 unauthorised overdraft fee + £21.50 paid transaction fee) | | Lloyds TSB current account | £20
(fee + £20 paid transaction fee) | | Barclays current account | £25
(no unauthorised overdraft fee + £25 paid transaction fee) | | HSBC current account | £30
(£30 paid transaction fee + additional £18 overdraft review fee waived if first mistake in first six | | Royal Bank of Scotland current account | £58
(£28 unauthorised overdraft fee + £30 paid transaction fee) | *1st paid or bounced charge refunded if no other charges in last 6 months. Also the item will be paid if doesn’t take you more than £50 over agreed overdraft limit. Table representative as of 1 November 2004. Abbey is committed to offering customers fairer treatment. Most people make an occasional mistake, and Abbey is the only bank to offer a payment guarantee, giving them the certainty that they won’t be penalised for a one-off error which takes them over their limit. Push versus pull When it comes to choosing where to open a current account, a third (30 per cent) still base their decision on the recommendations of friends and family and another 27 per cent simply want to bank with a familiar high street name. A further 20 want to move because they’re so fed up with their current bank. Interestingly, only ten per cent are attracted to a new bank because it offers a good rate of interest on credit balances. Angus Porter, Abbey’s Customer Director, says: "Whilst people don’t necessarily get excited about their finances, what aggravates them about their everyday banking is pretty clear. We’re alarmed to see that so many people are unhappy, and surprised that they don’t do anything about it. "We want to encourage unhappy consumers to stop accepting their lot, and to move to an alternative account. Despite dissatisfaction there is still inertia, and we want to break through that. " As well as offering good rates of 2.53% in-credit, or a low overdraft rate of 8.7% , Abbey also offers customers easy switching with a choice of options to move accounts. At the moment, Abbey is also offering £40 when people move their current account to an Abbey account. Abbey claims to make it stress-free by doing all the hard work. Financial News Feeds provided by OneCompare.com
Date published: 11/8/2004 9:41:50 AM
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