APPENDIX 3
Letter from Abbey National Plc
COMPETITION IN
PERSONAL FINANCIAL
SERVICES
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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