Byers seeks easy switching

Stephen Byers, trade and industry secretary, yesterday stepped up pressure on the banks, mortgage lenders and other service providers to promote competition by making it easier for their customers to switch suppliers.

His call came as government-sponsored research found considerable inertia among consumers, particularly among those with current and savings accounts and mortgages, and a "staggering" degree of loyalty to their present supplier.

Mr Byers is to join forces with regulators and consumer groups to demand greater price transparency, a wider range of directly comparable information and bigger access to quotes via the internet and telephone.

Senior government sources denied that Mr Byers was to embark on a "naming and shaming" campaign but some consumer groups have already indicated that they intend pinpointing companies offering high prices and poor quality of service - and make it hard for customers to switch.

"What we are doing is keeping up pressure on the companies to innovate and compete," the sources said. "We don't want cosy companies coasting along but world-class groups able to compete on a global scale and well-informed consumers acting as the driving forces for innovation."

The survey, carried out by FDS International for the department of trade and industry this summer, found that banks had the lowest level of switching, with just 6% of customers switching their current accounts in the last 5 years and a further 16% considering doing it.

Inertia - or loyalty - applied right across the board, with only 2% of over-55s switching and 10% of under-35s changing banks and just 4% of social class AB consumers switching. Four out of five current account holders have stayed with their bank for more than 10 years.

The survey authors suggest that this loyalty makes it hard for new entrants to wean customers away with fairer charging and better service and the Big Four, with a 64% market share, are likely to increase their dominance through mergers.

The DTI research found that of those who had considered changing 48% claimed it was "too much hassle" and 21% were simply happy with their bank. Even if switching were simple and free, 62% would refuse to do so and, though 59% believed they could make savings, this was not enough to make them change.

The survey found that switching rates were highest in insurance, with 53% of motorists and 30% of homeowners changing supplier - largely because it is easy to get comparative quotes and there is no one brand leader.

But only 12% of borrowers have switched mortgages in the last five years even though nearly a third of those surveyed considered the option - with the majority deterred by early redemption penalties, high legal costs and the difficulty of comparing the 4,000-5,000 deals available.

Switching in energy is growing, with the survey finding 37% in gas and 26% in electricity changing supplier - compared with the 28% and 20% identified by the regulator, Ofgem.

The survey puts renewed pressure on telecoms watchdog Oftel to get tougher with BT after finding that just 11% of fixed-line subscribers had switched in the past five years. Cable, however, is seen as a lower quality option.