TSB believes three simple changes can go a long way to make banking
better for all UK consumers
The nearly three year long investigation by the Competition
and Markets Authority (CMA) into competition in retail banking seems to have
backfired. In the past 12 months since
the publication of its final report, the number of consumers switching bank
accounts has fallen by 14% – with the average person likely to be £70 better
off by switching, that’s a collective £10 million in savings consumers are missing
The CMA’s attempt to fix the industry and get consumers a
better deal has failed and banking is still not working in the interest of
consumers. The big banks continue to have
a stranglehold on the market – they are taking customers for granted, trapping
them on poor deals and making it impossible to switch.
Fewer people are switching
than ever before
- The number of people using the Current Account
Switching Service (CASS) has fallen by 14% in the past 12 months1 –
that’s nearly 150,000 fewer people switching.
- Those customers have missed out on a saving over
£10 million by not switching banks – according to the CMA’s own research which
found that a typical customer could save on average £70 a year.
- Only 28% of people have heard of CASS according
to research by TSB2 – a far cry from the 75% customer awareness
figure which CASS reports1.
- 47% of people have never switched their current
account; a further 23% haven’t switched for more than 10 years2.
So, it’s no wonder that nearly seven in 10 people (68%)
think competition in the retail banking industry is worse or just the same
compared with this time 12 months ago2.
Consumers have been kept in
the dark for far too long
“The CMA had a golden opportunity to fix the industry, by
enabling consumers to make informed choices about their banking and ultimately
putting them in control. But one year on
and its attempt to get consumers a better deal has failed. People are still missing out on the benefits
of switching – to the tune of another £10 million in the past 12 months” says
Paul Pester, CEO at TSB – the bank born to bring more competition to the UK.
Throughout the CMA’s investigation, TSB explained that there
are a range of interconnected issues preventing the banking market from
operating in the best interests of consumers.
When taken together, these issues have created a market that has been
stacked against consumers for far too long:
1. Consumers don’t know what they are actually
paying for their day-to-day banking.
2. Consumers can’t easily assess whether a
competitor product would be better for them.
3. Consumers can’t easily move their bank account –
even if they do decide to switch.
Whilst some people might refer to banking customers as
‘inert’, it’s clear that many consumers are simply ‘trapped’ with their bank
due to a lack of knowledge, a lack of informed choice, and a lack of ability to
vote with their feet.
Disappointingly, these issues still exist today – with new
research by TSB2 revealing that:
- 41% of people believe it’s difficult to make an
informed choice when switching.
- 38% of consumers can’t see any benefits in
switching their bank account.
- 28% of people say ‘all products are the same’.
Putting customers back in
control of their banking
Last year, TSB urged the CMA to take action – recommending three
simple changes to make the market start working for consumers, and not just for
the banks that serve them:
1. Customers need to know what they’re paying for
their banking. All banks should tell
their customers how much they’ve paid each month through a standard format “monthly bill” – banking must be the
only industry that doesn’t do this already.
This will not only lead to a greater understanding of banking products
for consumers, it will also act as a prompt to shop around for a better
2. The industry needs to create a solution so all
customers can switch their bank account, particularly overdraft users who stand
to gain the most from switching – saving £260 a year on average as a heavy user
according to the CMA’s research – but are least likely to switch. This should include a requirement for the
industry to provide a standard format “credit
passport” which customers can take to their potential new bank.
3. All customers need to be made aware of their
right to switch banks. All banks should
be required to promote the existence of the Current Account Switching Service
to customers – explaining how switching is easy.
In the CMA’s final report it committed to delivering the
spirit of TSB’s credit passport through an Application Programme Interface
(API); but this has fallen into the hands of the big banks that are dragging
their feet. The pace of change is too
slow and customers have missed out on another £10 million in the meantime
because they still can’t switch. The
industry will need to do much more to explain the benefits of open APIs to
consumers – only 2% of people have heard of the concept according to research
Elsewhere, the CMA failed to make any strong recommendations
to bring real transparency to banking.
TSB’s mission to make banking
better for all UK consumers remains unchanged
TSB will continue to campaign for these three simple
changes. They are fundamental to
creating a banking market where consumers can make informed choices about the
best bank account for their needs; where consumers can vote with their feet and
move bank accounts easily and – ultimately – to a market that works in the
interest of consumers rather than in the interest of the big banks.
Paul Pester, Chief Executive
Officer for TSB, says: “In a
truly competitive market, consumers will be offered genuine choice and a level
of transparency they’ve never seen before, so they can make informed choices
and switch with ease. Only then will
consumers be empowered to vote with their feet and get a better deal.
“As Britain’s challenger bank, TSB will continue
to campaign for a standard format monthly bill for all bank account customers,
a switching service that works for everyone – including overdrafts users and,
for the big banks to make their customers aware of their ability to switch.”
Notes to editors
Switching Service switching dashboard data provided by Bacs – published 26 July
conducted for TSB; poll of 2,030 people; July 2017
For more details,
see TSB’s Competition Matters report.
TSB was built to
bring more competition to UK banking and ultimately make banking better for all
UK consumers. TSB only serves local customers and local businesses, to help
fuel local economies, because communities thriving across Britain is a good
thing for all of us.
We have a simple,
straightforward and transparent banking model and make clear on our website how
we operate and make money. We offer the products and services people tell us
they want, with none of the funny stuff people normally associate with
Our five million
customers appear to notice: TSB is Britain’s most recommended high street bank
and was recently identified as one of the top 10 big companies to work for.
information about TSB Bank plc, please visit our website www.tsb.co.uk.