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Moving your money could be easier than you realise

14 Mar 2012

The theme for World Consumer Rights Day (WCRD) 2012 on 15 March is 'real choice' in financial services and marks 50 years since John F. Kennedy articulated the first four consumer rights, including 'the right to choose'.

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CI member organisations in the EU and Australia have all recently conducted surveys to ask consumers about their experiences with switching bank accounts. The results show that more needs to be done to get consumers switching and encourage more competition between service providers.

Most consumers who have switched banks found the process easy

In surveys conducted in Australia, Belgium, Italy, Portugal, Spain and the UK, well over half of all consumers who had switched said that they found the process easy.  In Belgium, Spain and the UK this figure rises beyond 70 per cent.

The reasons that consumers gave for wanting to switch say a lot about the nature of consumer dissatisfaction with banks. Consumers in Spain, Belgium, Italy, Portugal, France and the UK all said they that one of the main motivations for switching was to get a better service or because they had a disagreement with their previous bank.

Another key motivator in all these countries was to get a better rate of interest. The costs of an existing account were also an important reason to switch for consumers in Spain, Belgium, Italy, Portugal and France. Similarly, in Australia the main reasons given for switching were the feeling that loyalty was not being acknowledged, and that fees and charges were unreasonable.

But many consumers are still put off because due to perceived complications

Yet the same surveys also showed that a significant number of consumers in all these countries who wish to switch banks do not end up going through with it. One of the top reasons cited was a concern that the switching process would be too complicated or time consuming. Many also felt they were unlikely to get a better service or better rates at a new bank.

But, as described above, consumers overwhelmingly find switching easy and other research by CI member organisations in the same countries show that real savings can be made.

The results also suggest that innovative ideas such as transferable bank account numbers could play a significant role in encouraging consumers to switch, with between 43 per cent (UK) and 67 per cent (Spain) saying that they would be more likely to move their money if they could take their bank account number with them.

Consumer concerns around switching must be addressed to promote 'real choice'

The basic consumer right to choose is being undermined in financial services if consumers feel that exercising that right will cause problems. In turn, financial institutions that don't feel pressure from consumers who are ready and willing to move their money are less likely to compete with each other to drive down costs, improve service quality and innovate.

These survey results clearly suggest that there is still more to be done to encourage consumers to switch. As Helen McCallum, Director General of Consumers International said:

"If a consumer is dissatisfied with the financial service they are receiving, banks need to work much harder to ensure the switching process is as pain free as possible.

"Providing clear comparative information, and ensuring the process is straightforward and risk free will encourage more consumers to switch, increase competition and promote better service and better deals."

The consumer movement unites for a global day of action

World Consumer Rights Day 2012 takes place on 15 March. CI member organisations around the world are engaging in a wide variety of activities to highlight this year's theme: 'Our money, our rights: campaigning for real choice in financial services'. To find out more:

  • Download CI's briefing on the barriers to choice faced by consumers, and the steps that can be taken to improve competition in financial services.
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