Select Committee on Treasury Fifth Report


  1. Credit card movements show what can be achieved in terms of portability. According to the Consumers' Association, a third of people have switched and 97% found the process easy.[59] However, the level of switching within the current account market remains relatively low, despite initiatives to simplify the process of switching accounts.
  2. Table 2: Switched current accounts as a percentage of total new current accounts













    per cent






    Source: Consumers' Association, Ev61 (extract from table)

  3. Between March 1997 and March 2000 there was no significant change in the level of switching in current accounts. There remains misplaced consumer concern over the difficulties of switching current accounts. A Which? Members survey published in October 2001 found that of those who had considered switching, 55% didn't do it.[60] Yet, the revised Banking Code Guidance for Subscribers stipulates a five working day commitment for provision of banking details to the new bank,[61] and the Consumer Association found 73% of people who actually switched found it a very easy process.[62]
  4. The process of switching bank accounts for SMEs is more complex than the transfer of personal accounts, due to their typically larger levels of account activity. The Competition Commission found that 24.4% of new SME current accounts were switchers.[63] This is subject to a five-week standard in the banking code, but evidence suggests that this is not being delivered consistently by banks. Abbey National commented that "it is certainly not a standard which is being delivered consistently".[64] The Committee believes it is vital that SMEs have confidence that any switch of bank accounts will be trouble-free and timely. The Committee recommends that the five-week target for account switching (where no borrowing is involved) is strengthened to a guarantee, with non-delivery triggering a compensation payment to the SME.
  5. The lack of universal 'portable credit references' that are consistent and universal is a key deterrent against switching bank accounts for SMEs for fear of losing their track record, according to both banks and small businesses.[65] A solution proposed by the Competition Commission was the introduction of a portable credit history.[66] This has been incorporated into the Business Banking Code and the four largest clearing banks have expressed a willingness to work towards it.[67] The Committee welcomes the proposal for portable credit history to be included in the Business Banking Code, monitored by the Banking Code Standards Board.


59   . Q35 and Ev 4, para 27 - Which? Members survey (published January 2002)  Back

60   . Ev 4, para 21 Back

61   Ev 55, para 2.3 Back

62   Q3 Back

63   Competition Commission, Table 3.5 Back

64   . QQ306-310 Back

65   . Ev 15 & QQ306-307 Back

66   Competition Commission report, Paragraph 2.550(g) Back

67   QQ250 - 254 Back

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Prepared 30 July 2002