New data mean bank customers will be able make more a informed decision on whether they should switch accounts.
The government is committed to improving competition in High Street banking. The Treasury and Department for Business, Innovation and Skills have secured an agreement from the major current account providers to give customers their account data in a simple, standardised format that can be used in comparison sites for the first time.
This means that instead of spending hours and days poring over their account statements and then researching individual products from other banks, consumers will be able to do quick and easy comparisons of their accounts, including the fees, charges and benefits attached, and allow them to make informed decisions on whether there are better accounts for them to switch to.
Martin Lewis, founder of moneysavingexpert.com, has announced that his website will work with the major banks and look to develop a comparison tool for consumers to check they are getting the best deal. Moneysavingexpert.com already has a “Cheap Energy Club” which compares energy bills and helps consumers work out the best tariff for them.
This is a major breakthrough in empowering consumers and increasing competition in High Street banking. The absence of effective price comparison tools in the current account market, where one person’s account usage could incur very different costs to another, depending on how each person uses the same account, is hindering the ability of consumers to make informed decisions.
Part of the government’s wider MiData programme, today’s announcement builds on the Current Account Switching Service (CASS), which launched last September and guarantees current account switches in just seven days. It will ensure the right information is available to help customers make more informed, positive choices on which current account is best for them – so that switches aren’t simply driven by poor customer service. Which? research has found that that half (52%) of consumers who haven’t switched banks say they’d be more likely to if it was easier to compare accounts.
So going forward, customers will be able to simply upload their usage data for analysis and get an instant answer to whether or not they would be able to save money by moving to a different account.
The major current account providers who have committed are: Barclays, HSBC, Lloyds, Nationwide, RBS, and Santander. The government expects that – in due course – all current account providers will make this data available.
Chancellor of the Exchequer, George Osborne said:
I am determined to build a banking system that works for customers. Key to that is making sure that they can make informed decisions. That is why the government has ensured the banks will provide customers with the information they need to decide whether their current account is the best one for them. MiData, combined with 7 day account switching, means that the government is increasing competition in High St banking and arming customers with the weapons they need to hold banks to account to make sure that they are getting the best deal.
Martin Lewis, creator of the UK’s biggest consumer site MoneySavingExpert.com said:
There’s been a resistance to moving current accounts for too long. While seven day switching has reduced the hassle, people still find it difficult to assess the tangible gains as there’s no simple price tag on bank accounts.
MiData will for the first time enable people to truly interrogate their own banking usage to switch to their perfect provider. Yet we need to ensure that is simple, easy and consumer friendly – and once the data is available, we’re committed to investigating making tools to do just that.
Which? executive director, Richard Lloyd, said:
We’ve long campaigned for consumers to be given better data about their personal current account running costs, to help people compare banks and inject much needed competition into the market. This information should make a big difference as people could be thousands of pounds worse off by having the wrong account.
We’re delighted the government has responded to our calls and we look forward to working with them and the banks to see how Which? could help consumers use this information to shop around.