BREAKING UP IS HARD TO DO

If Brits hate their banks so much, why don’t they ever switch?

Obsession
Future of Finance
Obsession
Future of Finance

New statistics out today paint a puzzling picture of British savers’ relationship with their banks. As we have reported before, the country’s biggest banks have paid out some £12 billion ($19.4 billion) in refunds and fines for selling dodgy insurance policies. Today, the Financial Ombudsman Service reported that complaints about these policies continue to pour in, with gripes over the six months to September up nearly 150% over the previous year, faster even than the previous year’s 140% surge in complaints. In the end, the total bill for these claims may rise to an eye-watering £20 billion.

At the same time, a new service launched in mid-September, with much fanfare, allows people to switch bank accounts (including direct debits, standing payments and the like) in seven working days, a vast improvement on the previously cumbersome practice that could take a month or more. The hassle of transferring accounts between banks was identified as one of the main reasons Brits very rarely switch accounts. The new account-switching service is meant to loosen the stranglehold that the biggest four banks—Barclays, HSBC, Lloyds Banking Group and RBS—have on the market; they control nearly 80% of all accounts.

Three-quarters of bank account holders in Britain say they have never moved their accounts, and only around 4% of accounts are transferred between banks in a given year. This is behind the common refrain that Brits are more likely to get divorced than part with their bank. (In England and Wales, 42% of marriages end in divorce.)

But in the month since the new service launched, only 9,000 more account holders switched banks versus the same period last year, according to statistics released today. This is an 11% rise in transfers, but given the low base it will do little to dent the big banks’ dominance any time soon. Widespread displeasure with banks and official efforts to stoke more competition seem no match for the staid habits of Brits who are known for their stiff upper lip.

 

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