Submissions sought on switching accounts
Increasing staff training and improving consumer awareness are among the possibilities being considered by the Central Bank to ease the switching process for current account holders.
In a discussion paper published today, the bank outlined the outcome of a review of the existing statutory switching code which sets out rules for banks to follow when consumers want to switch, and suggested areas where enhancements may be required.
An inspection and “mystery shopping” exercise carried out by the Central Bank last year involving visits to 60 branches of four banks led to concerns about the level of understanding among bank staff of the switching code.
Mystery shoppers only felt confidence in the switching process in approximately half of the branches visited. Some customers were asked to make an appointment with a specific staff member, which “may indicate that not all staff members are in a position to fully address queries relating to current account switching”.
The review also found the level of current account switching in Ireland is low. Between October 2010 and June 2011, just 6,000 current account holders switched to another provider, which represents 0.16 per cent of all current accounts held with the four banks inspected.
Reasons for low switching levels could be attributed to low financial incentives for customers, a lack of transparency of banking costs, perceived difficulties with the switching process, and a fear of losing an established relationship with a bank, the discussion paper said.
The review also found that banks were inconsistent in how they dealt with consumer detriment when they are responsible for errors or delays in the switching process.
No problems were identified with the current timeframe of 10 days imposed on new banks to complete a switch, but the discussion paper notes that the UK is proposing to change the timeframe to seven days.
The Central Bank is also considering extending the provisions of the code to demand deposit or savings accounts, and has called for submissions from the industry and the public on this and other issues covered in the discussion paper. Responses will be published and used to inform a revision of the switching code, which will be carried out in 2013.