Major banks are losing customers as consumers switch

Consumers are reportedly changing their saving habits and switching accounts by migrating from major high street banks, some of which have suffered bad press in recent times due to issues related to the troubles in the industry.

The Co-operative Bank has revealed that it is one of the beneficiaries of the migration after recording a 123 per cent annual rise in the number of customers switching from other banks to its products.

According to the bank's internal data, major high street names likely to lose customers to it include HBOS, Lloyds and the Royal Bank of Scotland (RBS), which lost the biggest number of savers to the bank.

The Co-operative said it had recorded a 700 per cent annual increase of switchers from RBS alone and added that the news about Sir Fred Goodwin's gigantic pension entitlement had led to even more defectors as their numbers doubled in the last month alone.

Other banks that have lost savers to the Co-operative include Alliance & Leicester, NatWest, Barclays, HSBC, First Direct and Nationwide.

Commenting on the data, John Barker, the head of current accounts at the Co-operative Bank said customers' attitudes are changing and they will readily switch if they feel the service is inadequate or insecure.

"There is a growing dissatisfaction with the major high street providers and customers are now no longer prepared to stay loyal to their existing bank," he said.

"Although the current account market is generally thought of as stagnant, our records show that since mid 2008 the market as a whole has started to change, with customers seeking security and looking to move their money to organisations they can trust."

He also said the increased growth was unusual because the switching market is normally dormant and such movements could only be influenced in the past by a lot of cash incentives.

Meanwhile, Friends Provident recently urged consumers to concentrate on saving for the future and not rely so much on inheritance after figures showed one in three British adults was counting on this to fortify their financial future.

According to research conducted by the organisation, the recession has thrown a spanner in the works and devalued some of the assets people were hoping to get, with 61 per cent of those hoping to inherit properties affected by this.

This makes it vital for individuals and their families to review their saving habits, advised Martin Palmer, the head of corporate pensions marketing at Friends Provident.

He said: "In the current climate, it is more critical than ever for people to review their pension savings and be realistic about what finance will be required to fund their retirement. We are urging families to plan for their financial futures now."