The Competition and Markets Authority (CMA) says the average customer with a standard current account could save up to £92 a year if they switched.
The CMA is concerned with the drop-off in the number of people of switching with just 57,779 using the seven day service in September, the lowest number since it was introduced four years ago.
The drop came despite a new advertising campaign to promote the service. Ads were placed on TV, radio, national newspapers and online.
A BBC investigation found that the reluctance to switch comes also despite the financial incentives being offered by some banks.
CYBG – the former Clydesdale and Yorkshire Bank – are currently offering a £250 switching bonus and HSBC is offering £200 to customers who switch and stay loyal for a year.
The news will come as something of a blow to the Treasury who see switching as an important element in cultivating more competition within the banking sector.
BACS, which runs the Current Account Switching Service, said four million customers have switched since the service first started in 2013.
It is believed there are more than 68 million current accounts in the UK.
The banks which have gained the most new customers are Nationwide, TSB and HSBC. The ones which have lost the most are Barclays, Clydesdale and Natwest.
How does it work?
A total of 40 banks and building societies have signed up to the service. All a customer has to do is decide which bank it wants to move to and set a date – the banks will do the rest between them:
- Transferring all direct debits, standing orders and payments in and out
- Further payments to the old account will be transferred to the new one
- Joint account holders need the permission of both parties
- Overdrafts can only be transferred if the new bank agrees
The CMA said the £92 saving was for an average customer, but added that bigger savings were likely to be made is more use was made of any overdraft facility.
The figures are for the average annual savings expected in the fifth year after switching, with any switching incentives divided over that period.