Not many customers change banks despite 'easy switching'
After the account-switching scheme opened for business in July last year, a Treasury spokesman said more than 15,500 people had used the service in its first 11 months, and the average monthly turnover of deposit accounts had also risen by 6.2 per cent.
But industry representatives said the take-up rate was underwhelming. Some 3.5 million accounts were already "switched" each year before the scheme started operating.
The chief executive of Teachers Mutual Bank, Steve James, said the process of changing banks remained complex, and most people who applied to use the scheme did not end up switching.
"We get people applying, but probably only about 30 per cent of the people actually do the switch at the end of the day," he said. "The system's still a little complicated for most customers."
The service - which applies only to transaction accounts - was set up as part of Labor's 2010 banking competition reforms.
It allows people to change banks by filling out a single form, but Mr James said this did not automatically transfer direct debits and credits. For this to occur, customers can ask their bank for a list of all direct debit and credits, which they can then give to their new bank.
Mr James said about one in 10 applications to switch were rejected by the bank that was losing a customer because their signature was different to the one kept on file.
Australian Bankers Association chief executive Steven Munchenberg said surveys showed most people were satisfied with their banks, and switching was made more difficult in Australia because of the way people set up their direct debits and credits.
Frequently Asked Questions about this Article…
The account-switching scheme, set up as part of Labor's 2010 banking competition reforms and opened in July last year, is a government-backed service for transaction accounts that lets customers start a bank switch by filling out a single form. It’s designed to simplify changing banks, though it doesn’t automatically move everything for you.
Take-up has been modest: a Treasury spokesman said more than 15,500 people used the service in its first 11 months, which works out to around 320 people a week. Treasury also reported average monthly turnover of deposit accounts rose by 6.2% in that period.
Industry representatives say many customers are still put off by the complexity. Before the scheme, about 3.5 million accounts were already being switched each year, and surveys cited by the Australian Bankers Association show most people are satisfied with their banks. The way direct debits and credits are set up in Australia also makes switching more difficult for some customers.
No. The single-form service does not automatically transfer direct debits and credits. Customers can ask their old bank for a list of all direct debits and credits and then give that list to their new bank to help move those payments across.
The service applies only to transaction accounts — the everyday accounts you use for deposits, withdrawals and payments — not to other account types.
One common reason reported by Teachers Mutual Bank is signature mismatch: about one in 10 applications to switch were rejected by the losing bank because the customer's signature differed from the one on file.
Teachers Mutual Bank’s CEO Steve James said the switching process remains complex and that many people who apply don’t complete the switch. He estimated roughly 30% of people who apply using the service actually finish the switch.
Yes — the scheme was introduced as part of reforms to increase banking competition. Early results suggest limited impact so far: take-up has been low and industry groups say switching is still complicated for many customers, so its effectiveness in boosting competition appears mixed at this stage.
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