Customers may not give up banking with a traditional High Street bank despite the government’s efforts to improve competition across the financial industry, said a Financial Times article. According to the research firm Pinset Masons and YouGov, roughly 16 percent of customers would likely switch to a “challenger bank” like Metro or TSD within the next two years. When compared to last year, this number jumped from 13 percent.
Despite this, about three-quarters of customers said that they will keep on doing business with High Street banks, this however, hinders the government’s recent move to broaden competition within the financial sector.
Industry watchdogs and lawmakers have initially suggested splitting up the U.K.’s largest banks—Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC—which provides the country with nine out of 10 business loans.
In October, the British Competition and Markets Authority (CMA) called on the country’s biggest lenders to provide more information around the full costs of accounts to clients instead of breaking up to inject some competition.
The Financial Times said that roughly 79 percent of personal account holders have not looked elsewhere for a sweeter deal in the past year and a major reason is due to the lack of clarity around switching services and other information that may not be readily available.
As Compliance Week previously reported, last year, the competition authority conducted a thorough review of the market and in its first set of recommendations the CMA dropped the axe on the idea of requiring banks to charge additional fees to customers that are in debt because there was a lack of evidence that showed free accounts affected competition.
The CMA found that a number of competition issues between personal current accounts (PCA) and small-and-medium-sized enterprise (SME) stemmed from customers who did not have a sufficient amount of new products and attractive packages to keep them from switching accounts.