by Mark Johnston
Consumers lose their faith in banks.
This last month or so has seen many big banks hitting the headlines, from Natwest and the Royal bank of Scotland’s customers unable to withdraw cash, make payments or check their balances, to the Barclays LIBOR rate scandal.
Ralph Silva, of SRN, a research consultancy, said “moving money from one place to another is the most complex thing; it’s not like flicking a light switch. Therefore it’s surprising that this kind of thing does not happen more often”.
Danni Pafford, spokesman for the campaign group ‘move your money’, said “for many already angry customers, furious about the banks fraudulent profiteering at their expense, the LIBOR scandal is the last straw”.
Therefore following the recent spate of banking scandals, millions of customers could now decide to switch their accounts.
Recent figures have shown that confidence in the big banks has plummeted, with 6 in 10 consumers now saying they no longer trust them to look after their money.
Kevin Mountford, head of banking at moneysupermarket.com, a comparison website, said “there are around 60 to 70 million accounts in theUK, so the potential impact could be huge. I am not saying that they will all follow through with it, but this should definitely fire a warning shot across the bows of banks”.
The backlash against the big four banks has now begun and customers are voting with their feet.
However, a study showed that 27% of consumers said that while they now trusted their banks less, they did not plan to switch accounts as they viewed financial institutions as “all the same”. The same study also showed that nearly 1 in 10 people said that they would like to change their bank but believed it would be “too much hassle”.
Consumers should not be afraid to move banks and the switching process has improved over the years.
Andrew Hagger, spokesman at moneynet.co.uk, said “if more people took action instead of just moaning, then maybe there would be less complacency and shoddy service and banks would sit up and take notice”.
Although this said, Building Societies and comparison websites have reported large upswings in activity as competition mounts to attract consumers.
The Building Societies Association (BSA) said customer inquiries generally had been running at up to 30% above normal levels.
Nationwide Building society, Britain’s biggest mutual, has also seen a 45% increase in people transferring their main account to them and the Co-op has also reported a 48% increase in online current account applications over the same period.
First direct has also stated that their call centre staff has been “speaking to a higher percentage of customers from the banks that have had negative press in the past week”.
The Yorkshire bank has too reported a 10% increase in new accounts.
In conclusion then it seems consumers are starting to move their money away from the traditional high street bank.
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