In the final three months of 2012, a record number of customers switched to a different bank.
Thousands of individuals shifted their current accounts in search of additional income to assist with bill payments and price increases.
Some banks offered up to £200 to switch customers.
Between October and December, 376,107 accounts were transferred, the most since a seven-day switching service began in 2013.
However, this represented only a small fraction of the millions of current accounts used by individuals, small businesses, and charitable organizations in the United Kingdom. This suggests that many less financially active customers, who would benefit the most from switching, may not have participated.
The Current Account Switching Service (CASS) manages the seven-day system in which details of direct debits and other recurring payments are automatically transferred to a customer’s new bank.
Any payments or requests made in error to the old account are automatically redirected to the new account.
The Competition and Markets Authority (CMA) discovered in 2016 that customers did not switch banks unless they had a problem with their current institution, and the majority believed they had little to gain financially by switching.
As the cost of living rose last year, several major banks provided cash incentives for switching accounts.
Moneyfacts’s Rachel Springall remarked: “Amid a cost-of-living crisis, a record-breaking quarter for current account switching occurred when several banking brands offered a free cash incentive.
“Customers who decided to switch accounts may have done so for a variety of reasons. Including poor service or the belief that their existing account was not working hard enough for them.
On the other hand, customers who were struggling financially may have found the free cash incentive difficult to refuse.
Due to increased prices, she said many people were budgeting and maximising their income.
Cash bonuses drive record bank switches
The figures, provided voluntarily by banks, show that switching customers using the scheme peaked in November when 157,376 accounts were moved – the highest-ever monthly total. Additionally, the quarterly total was a record.
David Piper, head of payments operations at Pay.The UK, the owner and operator of Cass, stated, “It is encouraging to see the biggest number of switches ever this quarter, demonstrating the service’s continued relevance to consumers and companies across the United Kingdom.”
Although there are fewer cash incentives available currently, they have not completely disappeared.
After a decade of weak returns for individuals placing money in savings accounts. The current account cash offers coincided with the introduction of improved rates for savers. However, the purchasing power of these savings accounts has diminished as a result of significantly rising costs.
CASS data shows Santander, HSBC, Starling, and Monzo had the most net switching increases between July and September 2022.
Outside of the system, it is possible to move current account providers, but these numbers are not gathered centrally.