1 million banking customers switch amidst fears of bank run

Business banking news review: week ending 11 Sept 2014

The new current account switching rules that went into effect nearly a year ago have attracted more than 1 million customers, but could a bank run be looming?

Personal and business bank account customers who¬†have grown disillusioned with their existing bank’s current account offerings were tickled pink in October of last year as new regulations made it mandatory for banks to complete a switch within seven working days. I know I was chuffed to bits to learn of the move, and I’m not alone – 1.1 million customers have made use of the new facility, and that figure is almost one-fifth higher than the number of banking customers that switched the year before.

In other words, the new rules have been a resounding success. Don’t like your overdraft fees or want to switch to a bank that actually offers good interest rates on its current account offerings? Now it’s easy to do so, especially when your incoming and outgoing payments are transitioned over automatically as well. It’s simple, it’s easy and it works like a charm.

Yet still, there are rumblings of a possible bank run in the future. The culprit behind all this fomenting furore is, interestingly enough, the looming referendum in Scotland. Savers north of the border are understandably petrified that if the country leaves the UK their deposits won’t be protected under the Financial Services Compensation Scheme any more because it’s a strictly British institution – and since the fate of whether an independent Scotland will be admitted into the EU and be covered under its own compensation scheme is up in the air, some people are saying that it’s almost inevitable there’s going to be a bank run if Scotland votes to leave the UK.

This is of course utter hogwash if you ask me. And it’s not just my armchair strategising either – the FSCS has actually just gone on record this week that even if the vote comes down to yes there transitionary period between Scotland leaving the UK and going it alone would come with the protection of the FSCS until another guarantee is put into place.

In other words, all you Better Together blokes out there need to stop rattling your sabres about how the sky will fall for Scottish savers if the referendum is successful. Don’t play on people’s fears and insecurities, you bastards!

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