With Account Number Portability (ANP) currently on the new Government agenda , as well as the subject of a Competition and Markets Authority (CMA) consultation, comparethemarket.com today launches a new report into the financial impact on consumers of introducing the option of taking your account number with you when switching banks.
The new Take Your Numbers report, which was undertaken in conjunction with an independent financial analyst, finds that around £5bn would be returned to the pockets of UK consumers over the next ten years as a direct result of increased competition in the retail banking sector.
Using the impact on mobile phone users after the introduction of Mobile Number Portability (MNP) as a guide, the report outlines the likely reduction in costs to consumers switching their bank accounts. These include notable savings related to lower overdraft interest charges and fees, falling account maintenance fees and reduced net credit interest as banks fight harder to keep customers.
Based on the central assumption that ANP would increase competition amongst providers and reduce costs to consumers by 8%, in line with the mobile phone market precedent, four scenarios are examined in the study:
* In each case, it is assumed that costs fall over a number of years, rather than immediately
As well as having a material financial benefit to consumers, it is clear that there is considerable demand for ANP. According to comparethemarket.com’s survey of more than 2,000 UK adults, more than half (54%) say that they would be a lot/a little more likely to switch current account if they could take their account numbers with them. More than a third (34%) blame their reluctance to switch providers on complexities in the switching process, or fears that their direct debits and standing orders might not be successfully transferred to their new bank. These findings are borne out by the fact that, despite the introduction of the Current Account Switch Service in 2013, switching activity has accounted for only about 1.5% of the current account market.
Jody Baker, Head of Money at comparethemarket.com, comments: ““If customers could switch banks more easily they would vote with their feet, and banks would have to fight harder to keep them by offering better deals and customer service. A small number of large high street banks continue to control the lion’s share of consumer finance products. Although the so-called “challenger banks”, such as TSB, Virgin Money and Metro Bank have made some inroads into the market, they are still only attracting a small number of switchers and therefore more needs to be done.
“UK current account holders would be more likely to switch – and, as a consequence, inject competition into a broken market – if they were able to take their sort code and account number with them. This would make the process far simpler and soothe concerns, that standing orders and direct debits get lost. We estimate that the increased competition resulting from account number portability will could ultimately lead to £5bn being returned back into consumers' purses over the next 10 years. This, in turn, will lead to increased spending and will therefore have a knock-on benefit to the UK economy. It is in the interests of Government to see PCA portability introduced.”
In its report, comparethemarket.com makes a number of recommendations to Government, including that:
Notes to Editors:
MethodologyThe research for the "Take Your Numbers!" report was carried by Douglas McNeill, an independent financial analyst. All figures have been rounded to one decimal place.
About comparethemarket.comcomparethemarket.com was launched in 2006 and has grown rapidly over the past nine years to become one of the UK’s leading price comparison websites.
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To find out more about take your numbers click below to download the full report.