UK banks must now publish how likely their customers would be to recommend their services as part of an effort by the Competition and Markets Authority and the Financial Conduct Authority to make switching accounts easier and to encourage consideration of alternative providers.
The rule is based on a 2016 CMA report that demanded 17 changes to make “banks work harder” by publishing whether their customers would recommend them, and moving toward implementing Open Banking. By February 2019, banks will also have to publish how long it takes for customers to open accounts and replace credit cards.
It’s a well-known and overused adage that people are more likely to switch spouse than their banks. For the UK’s competition authority, the task is to remove barriers to switching and give customers more control.
“Getting a good deal isn’t just about pricing,” said Christopher Woolard, Executive Director of Strategy and Competition at the FCA. “It’s also important for customers – including individuals and small businesses – to be able to judge the quality of service around their current account and to see whether other providers could offer something that suits them better.”
Banks will have to pay in proportion to market share for ongoing research to renew the results every February and August. The initial GfK personal banking study ran from September 2017 to June 2018, and surveyed a total of 16,012 current account holders. A further BDRC study ran over the same period and surveyed business current account holders.
It’s likely that RBS’s poor overall service quality rating – based on how likely customers would be to recommend the bank to a friend or family member – is the result of continued branch closures and the ongoing impact of scandals, the FT suggested.
Meanwhile, the Swedish bank Handelsbanken leads the business table. HSBC’s branchless bank First Direct leads the consumer table. In second place across both tables is Metro Bank.
Despite efforts to open up the market, with the introduction of a mandatory switching service, for instance, switching rates have remained “stubbornly low”, Margaret Doyle, head of financial services insights at Deloitte, told the FT.
This move, however, “opens up a raft of important data to consumers”, Doyle added. Not only will consumers have a clearer picture of the banking landscape, but so will price comparison sites. The fact that some banks have put the information on their homepage, while others have hidden it away, means that it will only be effective at an aggregate level.
But the information is about forcing banks to create better experiences over the long-term and not better sign-up rewards, by taking into account the opinions of long-time customers. “This information should encourage providers to offer the services that people value,” said Woolard.
Sourced from the CMA, GFK, BDRC, Financial Times; additional content by WARC Staff