It’s been in the news again, the Competition and Markets Authority have released a report claiming that customers could save up to £70 per account by switching to another bank. Yet again however the CMA is missing a key point – customers who get charged over and over again for overdrafts won’t get accepted by the banks with the cheaper rates!
The CMA is one of those Quanga type groups that should be taken out and broken up, thrown into the recycling bin along with all the other do-gooder groups that claim to know what they are talking about in the real day to day finances of the everyday person.
If you read the reports you can tell these groups are dominated by accountants and statisticians. What they do is look at the outline figures, see that someone can save £70 a year, scratch their heads for a while and wonder why nobody switches bank accounts.
What they don’t realise of course, is that there is something that is obvious to anyone that has tried to switch accounts recently. The good prime banks don’t want those people that are constantly in the red, they won’t pass the credit checks. Therefore comparing the most expensive overdraft charging account to the cheapest one is utterly pointless.
We see this all the time in finance, groups made up of highly paid individuals not seeing the basic barriers that people face every day. Comparing Natwest’s basic account to that of First Direct is not a fair comparison. Perhaps if they weren’t as highly paid, and they had to live in their overdrafts like the rest of us and it would soon dawn on them that every day people aren’t stupid, they don’t change banks because often they can’t. Switching banks isn't like switching supermarkets, you actually have to qualify to switch.
On the subject of changing bank accounts, we notice that the price comparison sites are drooling at the prospect of switching becoming the norm in the UK. They will then swoop in to collect their £40 bonus for signing someone up to the worst rip off account ever. The end of free banking is nigh if the Price Comparison sites are hovering; they are the vultures increasing costs on most service sectors.
If the CMA wants to do something useful to justify their wages, banning comparison sites would be a very good place to start.