Few consumers switching banks despite new code
Published 07/05/2014 | 02:30
THE Central Bank has been forced to admit that few consumers switch bank accounts, despite rules forcing banks to make the process easy.
But the regulators insisted that more consumers were now moving their accounts from one bank to another. This is often being done in a bid to escape higher fees and bad service.
Fewer than 10,000 people switched bank account in the second half of last year, using the Central Bank's switcher code.
The code was introduced by the Central Bank in October 2010 to make the process of switching current accounts easier and quicker for consumers.
There are a total of 5.4 million current accounts in Ireland. In percentage terms, less than 0.2pc of accounts were switched in the second six months of last year. In the first half of last year 4,516 consumers moved bank.
Finance experts said they had expected a higher number of switchers due to fees and charges being imposed by the main banks, and the decision of ACC and Danske Bank to pull out of retail banking here.
Director of Consumer Protection at the Central Bank Bernard Sheridan said: "These new figures show that, while low, an increasing number of consumers are availing of the Central Bank's Switching Code."
Higher charges were prompting people to move bank, he added.
"Factors which appear to be influencing the choices consumers are making include: changing fees and charges; service issues; and announcements regarding the withdrawal of current account providers from the market."
The code is supposed to make it easier for consumers to move banks, and demands that the switch is completed within 10 days. It sets out that much of the bureaucratic work on the switch must be done by the banks.
Finance expert with price comparison site Bonkers.ie, Simon Moynihan, said he had expected far higher switching levels. He said 60,000 people were forced to find a new retail bank when Danske Bank shut down its customer accounts in stages this year.
"There has been an increase in the number of people switching in the second half of this year but I would have expected way more," he said.
He said bank charges were now a major issue for householders. Someone with an AIB account can expect to pay €120 a year in fees, with a Bank of Ireland customer being hit for €100 on average. Ulster Bank customers are now typically paying €48 a year.