EU study reveals switching bank accounts is ‘Herculean task’

EU study reveals switching bank accounts is ‘Herculean task’


Share on Facebook
Share on Twitter
Share on Google+
Share on LinkedIn
+

Results of a consumer market study published on 24 February showed that more than two-thirds of mystery shoppers were not able to switch their bank account successfully.

The European Commission's 2007 inquiry into the retail banking sector identified significant barriers to customer mobility. These findings were followed by extensive consultation, which led the Commission to urge the Banking Industry Committee (EBIC) to act.

EBIC established a self-regulatory initiative based on common principles, which was expected to bring clarity for consumers, but the results show that self-regulation in this case is clearly not delivering the desired results.

Health and Consumer Commissioner John Dalli said: "I would have liked to see this self regulation initiative working better and banks doing more to make switching easier for European consumers. Consumers need to be able to look for opportunities in the market without undue difficulty or fear of disruption of their payments or receipts. People should be able to change their bank account as easily as they do any other service."

Internal Market Commissioner Michel Barnier shared Dalli's sentiment. He stated: "The results of the study published today explain why consumers change their banks so rarely. If consumers are not able to easily switch bank accounts, they cannot take advantage of better and cheaper banking services on offer elsewhere. The single market is thus deprived of the competitive drive that leads to innovation, cost savings and better-quality banking services. This, in the long-run, can prove to be an obstacle to growth".

The main findings of the study showed that only 19% of mystery shoppers were able to successfully open a bank account with a new bank and switch a standing order based on the process described in the Common Principles established through self-regulation; 81% of mystery shoppers had problems switching and they identified weaknesses such as 71% of banks not assisting with the transfer and 3% found that their new bank refused to open a standard account.

Another major issue that the report revealed was that there was a lack of information – the study also mentioned a low-level of awareness about switching among bank staff.

Share on Facebook
Share on Twitter
Share on Google+
Share on LinkedIn
+