Banks defend low level of account switching
Consumer bodies accuse lenders of failing to promote changing
BANKS have defended the fact that fewer than 70,000 people have switched current accounts in the past five years.
More than 200,000 people are seeking a new bank after both Halifax and Postbank said recently that they planned to close their retail banking operations here.
But consumer bodies have condemned the banks for failing to do enough to promote account switching.
Head of the National Consumer Agency (NCA) Ann Fitzgerald said the decline in competition among banks for consumer current accounts was a major issue for consumers.
The NCA, a state body, has just taken over the promotion of personal finance information from the Financial Regulator.
Ms Fitzgerald said she was due to meet the Irish Banking Federation in the next two weeks and would be raising the issue of account switching and the transparency of fees and charges.
Current accounts, which are basic bank transaction accounts, have also come into focus after Bank of Ireland said two weeks ago it was pushing up the interest it charged on its accounts for overdrafts and loans.
Bank of Ireland is the market leader for current accounts, with about four out of 10 current accounts.
Chief executive of the Consumers' Association of Ireland Dermott Jewell said people were reluctant to switch banks because inertia and heavy marketing by banks were working against consumers who wanted to change bank accounts.
Halifax is closing its 44 branches by the end of May and has told its 50,000 current account customers to find another bank to provide them with day-to-day banking.
Postbank, which operates in 1,000 post offices, is closing at the end of the year. It had about 170,000 current account customers.
The Irish Banking Federation (IBF) stressed yesterday that switching accounts from one bank to another was straightforward.
"The IBF's Account Switching Code has been very successful since its introduction in 2005, a spokesman for the banking body said. "It has directly facilitated the switching of 68,378 personal accounts up to the end of December 2009."
The spokesman defended the fact that the number of people switching in the past five years averaged fewer than 14,000 a year.
"The level of switching has been healthy, but the level has been low because consumers had other things on their minds lately," he said, explaining that the downturn was reducing the numbers switching accounts.
Under the switching code -- which covers all current, deposit and savings accounts held by personal customers -- the country's leading banks promise to have in place step-by-step procedures that make it easier for personal customers to switch accounts from one financial institution to another.
Permanent TSB has one of the most competitive current accounts at the moment.
Its offering has no transaction charges, includes an interest-free overdraft of up to €10,000 for three months, and the bank pays 2pc interest on balances up to €1,500.