Select Committee on Treasury Appendices to the Minutes of Evidence


Letter from Abbey National Plc


  Given the Treasury Select Committee's enquiry into Banking and its wish to ensure a competitive market, I thought you might be interested in Abbey National's experience of the difficulties customers face in switching current accounts. As you will be interviewing representatives of APACS and the BBA on 16 January about competition in the market for personal banking services, this specific issue may indeed arise, as it was one of the areas highlighted for redress in the Cruickshank report into UK banking.

  Over the course of the past four months, we have looked at how long it takes each of the main banks to hand over the information needed when customers are switching current accounts to Abbey National. Our investigations revealed that two banks, NatWest and Lloyds TSB, were not providing information within agreed timescales.

  The timescale agreed following the Bankers' Automated Clearing Service (BACS) Phase 1 Inter-Bank Transfer pilot is to provide account information within 10 working days.[6] However, in our experience the average number of working days taken by NatWest to provide account information was 24 days, whilst Lloyds TSB fared little better with an average of 18 days.[7]

  The ease with which customers can switch current accounts is a key indicator of banks commitment to creating a competitive market. Further Abbey National research has found that 77 per cent of customers in the UK have thought about switching current accounts, but 42 per cent say the biggest barrier to actually doing so is the "hassle".[8]

  The recently revised Banking Code stipulates that banks and building societies must co-operate to ensure customers can switch to another provider as smoothly as possible. The Abbey National Switcher Service meets this criterion and has been running successfully since May 2000, when we took part in the initial BACS pilot scheme to make it easier for customers to switch banks. Abbey National is also participating in the BACS Phase 2 Automated Inter-Bank Transfer pilot to provide automated switching services by the end of 2001.

  Abbey National is committed to ensuring a fair and competitive market in personal banking, and we very much hope that the Select Committee's investigations in this field are a success. If you would like to discuss this or any other matter further, I would be very happy to help.

12 January 2001

6   The BACS Phase I Inter-Bank Transfer pilot began on 1 October 1999. The automated Phase II began on 1 November 2000. Back

7   Abbey National investigated the average number of working days taken by originating banks and building societies to provide complete account information. It examined the period from 1 September 2000 to 22 December 2000. Only those bank and building societies providing details on more than 20 accounts over the specified period were included within the research. Over this period NatWest took an average of 24.096 working days to provide account information; Lloyds TSB averaged 18.02 working days. Back

8   Abbey National Banking Survey May 1999, undertaken by RSGB on behalf of Taylor Nelson Sofres plc and Abbey National plc. The findings were based on a representative sample of 4,000 adults aged 16 and over. Back

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