James Daley

By James Daley

In September last year, the banking industry signed up to a new scheme that promised to complete bank account switching in a maximum of seven working days. Before the new service was cooked up, the average switch time was almost a month - and horror stories of much longer transitions were common.

Seven working days was certainly an improvement - but it's hardly 21st century. You can switch your mobile phone provider in 24 hours, and the only reason that we're not close to a similar situation in banking is down to a lack of investment in IT over the past couple of decades.

Like Which?, Fairer Finance supports a move to portable account numbers - whereby you'd keep the same account number your whole life, and could switch bank as easily as you can move your mobile phone number from T-Mobile to O2. But given that this will cost the industry several hundred million pounds worth of investment, banks have been keen to persuade regulators and policymakers that they can speed things up by working with their current creaking infrastructure.

The current account guarantee is still rhetoric

The current account switching guarantee certainly looks like a worthy attempt to move things in the right direction. Not only do banks now promise to switch you within seven working days, but they also guarantee that any stray payments to your old account will be automatically redirected for 13 months, and that if anything goes wrong, you won't be left out of pocket.

But while the industry has been quick to trumpet the success of the scheme, anecdotal evidence is that banks are struggling to live up to their promises. Although account switching was up 16% in the first six months after the service's launch (driven in no small part by the Payments Council's mass market advertising campaign), the Ombudsman tells me it has already seen a number of complaints from customers who have not had their switch completed in the seven days as promised.

Meanwhile, on the BBC's Moneybox show on Wednesday, we had a call from a listener who had received a foreign payment into her old bank, which had not been passed onto her new bank. She'd then spent the next few weeks being passed from pillar to post between her old and new banks to try and sort out who was responsible. This was exactly the kind of thing that the new scheme promised to eliminate. Of course, this is just one case, but I've read similar stories from others on forums as well.

No avoiding investment

As I feared when it was announced, the Current Account Switching service is a sticking plaster on a gaping wound. That's not to say it's been a wasted effort. It's an important step in the right direction, but it can't be a replacement for portable account numbers - which the regulator and government should continue to pursue.

Yes, it will be costly. Yes, it will take time. All the more reason to get the industry to commit to it now - so that we know we are on the road to a banking market where it's easy to switch, and customers can assert some competitive pressure on banks by moving their business elsewhere in a flash if they're not happy with the service they're receiving. The FCA has a mandate to ensure markets are competitive. Even after a 16% rise, the number of bank account switches is incredibly low. There's much more work to do.