Throwing good money after bad

Clearing house Bacs has said that it is working on a number of initiatives to boost the UK’s struggling Current Account Switch Service (CASS), following intervention by the Financial Conduct Authority (FCA).The regulator has recommended increasing public awareness of CASS, with Bacs, which runs the service, launching a multi-million pound campaign in autumn of last year, with a second burst in January. Bacs has also secured commitment from participating banks and building societies to invest a further £9.2 million later this year.

The government wants UK consumers to vote with their feet, and we're also seeing increased competition between providers and a wave of challenger banks and altFIs looking to usher in a new digital era in financial services. Yet customers are by and large choosing to stick with the banking status quo. Not because RBS/NatWest, Barclays et al are providing amazing customer service, but because people are apathetic when it comes to current accounts etc.

Case in point, my girlfriend has an account with Lloyds Bank; she has been moaning about them for months now. I keep telling her to jump ship to Nationwide Building Society (as I did a couple of years ago, leaving the rubbish NatWest behind); there is even a cash incentive on offer if she does so. But her attitude is, what’s the point? They’re all as bad as each other.

Just over one million Brits switched their bank accounts last year, 11% down on the 1.15 million recorded in 2014. There have been around 2.5 million switches since CASS launched in 2013. If I were a school teacher, I would give that a B-, not terrible but must do better.

It remains to be seen if CASS gets much more of a chance to up its grades. The UK banks spent £750 to establish it, but will throwing more cash at a publicity blitz be enough to satisfy the FCA? It could be seen as a desperate last roll of the dice. The regulator has also looked at full account portability, either by building it within the existing system and then running the additional infrastructure centrally, as happens with CASS, or via a new central utility model based on a shared platform.

That, to me, seems like a better way to go. It might be time to admit defeat and write off a well-intentioned but ultimately underperforming, costly project. Either that, or hope all these cool new altFIs and challenger banks can live up to the hype and make a genuine difference over the next few years.

Scott Thompson

Senior Editor

IBS Journal