Switching accounts should be easier

THE Competition Authority report into the banking sector says switching personal accounts must be made easier.

In its long-awaited report the Competition Authority said consumers face difficulties in switching their accounts and this must be made easier.

It wants the Irish Bankers Federation to review its existing account switching code, which currently takes around 10 days, and reduce the period. It pointed to Britain where switching time has been cut to three days and the number of people moving between the big banks has doubled.

The report says one of the reasons why customers are “locked in” to one bank is the concentration of accounts between AIB and Bank of Ireland.

The report found the two institutions controlled 70% of the personal current account market and there were numerous entry barriers to foreign banks taking a piece of their business.

“This means that customers have little choice and that their banks don’t compete very intensely for their business,” the Authority’s chairman John Fingleton said yesterday,

He said consumers are not benefitting from better interest rates and lower fees and charges because there were few competitors in retail banking.

It also said the Government must take its share of the blame by imposing stamp duty on ATM and credit cards. The report said consumers who switch face paying the duty twice. It noted the Department of Finance has already indicated it may scrap this.

Responding to the report yesterday, the Irish Bankers Federation said it was already working on a number of the recommendations contained in the report.

Permanent TSB, which has a 20% share of the current account market, said it expects more competition in this segment following the introduction of the IBF code on switching in January.

“There is no doubt that the absence of a streamlined process for switching current accounts has made it much more difficult for smaller banks to compete in this area. We expect that the introduction of the code will greatly improve the situation,” the bank’s head of marketing Niall O’Grady said.

Other proposals in the report include the ending of price controls by the Irish Financial Services Regulatory Authority.

The report said: “Sustained instances of high charges are less likely to be successful and profitable in a market characterised by ease of movement by consumers and greater innovation and price competition by the banks.”