The largest banks in the UK are currently sitting on approximately £100 billion in current account cash deposits, none of which is earning any discernible interest.
47 million current account customers in the UK are right now missing out on any kind of appreciable gains due to abysmal interest rates. Moreover, consumers are now facing fears that they could be paying as much as £25 in monthly fees for extras they have no need of.
Meanwhile, the Financial Ombudsman Service released figures last week that complaints being brought against High Street personal and business bank account providers have undergone a 50 per cent increase. Despite this, a recently published banking report discovered that, while consumers may switch mortgage, credit card, or insurance providers, current account holders seldom switch banks.
This past Monday, Sir John Vickers, speaking on behalf of the Independent Commission on Banking, released several recommendations with an aim towards making banks safer and more competitive. Sir John’s key proposal was to separate the banks into different entities, with the retail arms going one way and investment banking divisions another, in order to protect savers’ deposits.
However, he also said that banks must make it easier to switch accounts, calling for the ability to do so in seven days or less. He also demanded that banks be more up front with the amount of interest customers are losing by holding their cash in a current account with little or no return due to rock-bottom interest rates.
While it was inconclusive if they were loyal to their providers or just apathetic to the whole switching process, it was found that only 2 per cent of current account holders actually decided to change their banking providers in 2010.