Today the European Commission published a study which investigates the ease by which consumers can switch their bank account. It also takes into account the common principles which were developed by the Banking Industry Committee.
The study shows that switching a bank account was not as easy as one should expect:
- only 19 percent of mystery shoppers were able to successfully open a bank account with a new bank and switch a standing order based on the process described in the Common Principles established through self-regulation.
- 71 percent of banks would not assist in the transfer (not following the procedures outlined in the Common Principles).
- 7 percent of banks approached did not open an account and/or switch a standing order within fourteen working days.
- while the study also found that 86 percent of consumers enquiring about a switch either in a bank branch, online or by telephone, did receive information from at least one information source, the level of information provided was found to vary widely. 14% of consumers received no information at all. The study also mentions a low level of awareness about switching among bank staff.
EU Health and Consumer Commissioner John Dalli said, "I would have liked to see this self regulation initiative working better and banks doing more to make switching easier for European consumers. Consumers need to be able to look for opportunities in the market without undue difficulty or fear of disruption of their payments or receipts. People should be able to change their bank account as easily as they do any other service."
EU Internal Market Commissioner Michel Barnier said "The results of the study published today explain why consumers change their banks so rarely. If consumers are not able to easily switch bank accounts, they cannot take advantage of better and cheaper banking services on offer elsewhere. The single market is thus deprived of the competitive drive that leads to innovation, cost savings and better quality banking services. This, in the long-run, can prove to be an obstacle to growth".
The European Commission is now assessing possible courses of action to adequately address the shortcomings identified in this study with switching.
Source: European Commission