Fair play guys: account switching seems to have worked

Let's not get too comfortable though, writes Douglas Blakey.

After all the hype and the ads and the PR activity relating to account switching, fairs fair: the banks have got off to a decent start. The system works. Complaints about the seven day deadline not being met are few and far between.

More than 35,000 UK customers have started to switch their bank account in the past three weeks. Add to the mix positive stats from the comparison website Moneysupermarket.com – it has reported a 45 percent increase in the number of visitors to its site looking to switch their current account.

Among the winners: Nationwide reports a near 80 percent rise this month in new customers switching to the UK’s largest mutual. HSBC subsidiary First Direct says calls from potential switchers have doubled.

Metro Bank has also issued upbeat news about having to double the number of staff handling account switchers. Let us not however get carried away. Last year, 1.2 million current account customers or around 2.6 percent of the total 46 million accounts were switched.

So call it about 23,000 customers per week. For the full month since seven day account switching went live, it might be fair to estimate that account switchers have doubled year-on-year.

If sustained over the longer term that would mean that around 5 or 6 percent of current account customers will switch. A significant increase and one that makes the exercise worthwhile, albeit at a total industry wide cost of £750 million in IT expenses.

But way off some of the wilder and unrealistic predictions from the more excitable commentators that up to a quarter of us might switch our main bank account. Such guestimates were never realistic and are unlikely to come close to being realised.

Meantime, spare a thought for the beleagured souls at the UK arm of National Australia Bank: that is Clydesdale Bank and Yorkshire Bank to you and me. Clydesdale Bank somehow contrived to mess up mortgage calculations for 42,500 customers.

It was bad enough that it got its sums wrong a first time and copped a £9 million fine from the regulator for a blatant failure to treat its customers fairly. It has now somehow achieved a double whammy of appalling PR by paying out compensation twice to some of its customers. Not perhaps the best week to be a member of the account switching team at Clydesdale.

Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

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In your 30s? You missed out on £26,000 and you're not even protesting

The 1980s kids seem resigned to their fate - for now. 

Imagine you’re in your thirties, and you’re renting in a shared house, on roughly the same pay you earned five years ago. Now imagine you have a friend, also in their thirties. This friend owns their own home, gets pay rises every year and has a more generous pension to beat. In fact, they are twice as rich as you. 

When you try to talk about how worried you are about your financial situation, the friend shrugs and says: “I was in that situation too.”

Un-friend, right? But this is, in fact, reality. A study from the Institute for Fiscal Studies found that Brits in their early thirties have a median wealth of £27,000. But ten years ago, a thirty something had £53,000. In other words, that unbearable friend is just someone exactly the same as you, who is now in their forties. 

Not only do Brits born in the early 1980s have half the wealth they would have had if they were born in the 1970s, but they are the first generation to be in this position since World War II.  According to the IFS study, each cohort has got progressively richer. But then, just as the 1980s kids were reaching adulthood, a couple of things happened at once.

House prices raced ahead of wages. Employers made pensions less generous. And, at the crucial point that the 1980s kids were finding their feet in the jobs market, the recession struck. The 1980s kids didn’t manage to buy homes in time to take advantage of low mortgage rates. Instead, they are stuck paying increasing amounts of rent. 

If the wealth distribution between someone in their 30s and someone in their 40s is stark, this is only the starting point in intergenerational inequality. The IFS expects pensioners’ incomes to race ahead of workers in the coming decade. 

So why, given this unprecedented reversal in fortunes, are Brits in their early thirties not marching in the streets? Why are they not burning tyres outside the Treasury while shouting: “Give us out £26k back?” 

The obvious fact that no one is going to be protesting their granny’s good fortune aside, it seems one reason for the 1980s kids’ resignation is they are still in denial. One thirty something wrote to The Staggers that the idea of being able to buy a house had become too abstract to worry about. Instead:

“You just try and get through this month and then worry about next month, which is probably self-defeating, but I think it's quite tough to get in the mindset that you're going to put something by so maybe in 10 years you can buy a shoebox a two-hour train ride from where you actually want to be.”

Another reflected that “people keep saying ‘something will turn up’”.

The Staggers turned to our resident thirty something, Yo Zushi, for his thoughts. He agreed with the IFS analysis that the recession mattered:

"We were spoiled by an artificially inflated balloon of cheap credit and growing up was something you did… later. Then the crash came in 2007-2008, and it became something we couldn’t afford to do. 

I would have got round to becoming comfortably off, I tell myself, had I been given another ten years of amoral capitalist boom to do so. Many of those who were born in the early 1970s drifted along, took a nap and woke up in possession of a house, all mod cons and a decent-paying job. But we slightly younger Gen X-ers followed in their slipstream and somehow fell off the edge. Oh well. "

Will the inertia of the1980s kids last? Perhaps – but Zushi sees in the support for Jeremy Corbyn, a swell of feeling at last. “Our lack of access to the life we were promised in our teens has woken many of us up to why things suck. That’s a good thing. 

“And now we have Corbyn to help sort it all out. That’s not meant sarcastically – I really think he’ll do it.”