George Osborne under fire for seven day current account switching service timidity

 
Tim Wallace
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George Osborne will address the seven day switching scheme next week (Source: Getty)
George Osborne is expected to tweak the seven day current account switching scheme to iron out some of the wrinkles in the system, in his Autumn Statement next week.

But the changes did not go nearly far enough to open up the market to competition, the Yorkshire Building Society said. And consumer group Which? also called for the changes to go further and faster.

Currently, any payment to an old account will be transferred to the new account automatically for two years after the switch. Osborne is planning to raise this to three years.

As the system stands, small firms can use the switching scheme if their turnover is below €2m (£1.6m) – a limit set to be hiked to £6.5m. And the chancellor is considering telling banks to speed up the switches, from seven working days to five, according to the plans, which were first reported by Sky News.

But critics argue the changes are mere tinkering, and are insufficient to inject the competition the sector needs.

“The switching service is an innovation, which despite the government’s good intentions, has unfortunately not done enough to encourage competition,” said the Yorkshire Building Society’s Mike Regnier.

“We instead want to see real reform that achieves full account portability.”

This would eliminate the manual changes which customers have to make to some of their payments.

“Changes to increase the speed of switching would be welcome, but they must be supported by much stronger reforms that get to the heart of the lack of competition and trust in the market,” said Richard Lloyd from Which? “Banks must also make it easier for people to compare the cost of running current accounts and to find the best account for them.”

The Treasury and the Payments Council declined to comment ahead of the Autumn Statement.

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