Bank account switching service gets new advertising push

http://www.theguardian.com/money/2015/sep/14/bank-account-switching-service-advertising

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A new advertising campaign is being prepared for the service set up by banks to allow customers to switch current accounts within seven days amid criticism from the banks that the service is too low key.

The UK’s banks spent £750m to establish the switching service in response to the Independent Commission on Banking, chaired by Sir John Vickers. But so far, since it began in September 2013, only 2 million people have used it.

The current account switch service (Cass) is intended to make it easier for customers to move current accounts by pledging to shift direct debit mandates and regular payments to a new bank within seven working days.

But it has been criticised by banks in private hearings held by the Competition and Markets Authority (CMA) as part of its investigation into the personal and small business banking sectors. The banks told the competition watchdog more should be done to increase customer awareness.

Launched with much fanfare, Cass makes the bank or building society winning the new account responsible for making payment transfers. Before the seven-day Cass pledge was adopted, it took up to a month to switch accounts. For the last six months, the service has been run by Bacs, the behind the scenes payment service for banks and building societies, rather than the now disbanded Payments Council.

A spokesperson for Bacs said: “We have been working to develop a new multi-million pound awareness-raising campaign. This goes live later this week, combining TV, press and online advertising, and PR and social media support”.

The big four of Lloyds Banking Group, Royal Bank of Scotland, HSBC and Barclays have a combined 75% market share of current accounts despite repeated investigations into the banking market.

In notes of meetings with the CMA, the challenger banks, such as Metro and Virgin Money, said: “Unless there was a major re-think, Lloyds would continue to dominate the current account and mortgage market and RBS the SME and corporate banking market”. They said the service had not been well enough advertised.

Lloyds, with 25% of all current accounts, has also criticised the levels of awareness. It told the CMA that “the marketing campaign should have been much more significant and needed to be continuous in order for uptake to increase”.

Royal Bank of Scotland said it did not feel Cass was “quite as recognised as it would like it to be. The industry spent approximately £700-£750m putting the system in place, and it was not quite as well known or appreciated as RBS would like, given this investment”.

The ease with which customers can change current accounts is being looked at by the CMA as part of a wider investigation into the banks. It is due to publish its findings next month.

In an attempt to head off intervention, which could include a breakup of banks, Lloyds has told the CMA it has devised a system to enable customers to compare information about current accounts in the way they can car insurance and mortgages.