MSE News

Thousands switch away from TSB during online banking chaos

Over 20,000 TSB customers switched away from the bank in the months surrounding its IT glitch – its biggest loss of customers since the Current Account Switch Service launched. 

The latest figures from the Current Account Switch Service (CASS) show that 21,790 consumers switched away from TSB between April and June this year, at the height of its IT meltdown. This represented a net loss of 16,641 customers for the bank.

It is the biggest fall in customers for TSB ever recorded as part of the switching service's figures, although heavier losses have been reported in the past from Barclays, which lost net 17,268 customers in the first quarter of 2018.

TSB, however, says the CASS figures are just one part of the picture, and in total it saw more than 20,000 customers open new accounts during this period. Though it's not clear how many closed their accounts.

The IT disruption started on 20 April, and saw many locked out of online banking and their mobile apps. In some cases, customers were even given access to other people's accounts and in other cases, customers were stopped from switching to another bank. Wider problems continued throughout the summer, and some customers are still awaiting compensation. 

The latest CASS figures also show that over five million bank switches have been completed using the official seven-day switching service since its launch in 2013, with almost one million switches in the last 12 months alone. Yet this still represents a tiny fraction of the total UK current account market, meaning many more could benefit from switching.

See our Best Bank Accounts guide for top switching offers – including how to get £200 cash or £185 in vouchers.

How does bank switching work?

CASS was launched in 2013 to simplify the process of switching between banks.

It's completely free – you simply contact the new bank or building society you want to switch to and ask it to move your old account using the CASS (often this is part of the application process).

You can choose a switch date to suit you as long as you allow at least seven working days.

All payments going in and out, except for recurring payments set up with a debit card such as a gym membership, will be moved to your new account. Any wrongly applied charges, eg, for a missed direct debit, will also be refunded.

What did the latest switch figures show?

While TSB took the wooden spoon in the latest CASS figures, Nationwide was the overall winner with a net gain of 34,577 customers. HSBC (which includes First Direct and M&S Bank) came in second with a net gain of 25,605, suggesting that consumers are taking advantage of bonus switching offers.

It was also a successful quarter for challenger banks, as app-based Monzo featured in the league table for the first time with a net gain of 2,702 (before now, it had been absorbed into the 'low volume participants' category). Starling Bank also saw further growth with a net gain of 1,737 customers.

Here's the full breakdown:

Switching figures 1 April 2018 – 30 June 2018

Brand Gains Losses Net gains/losses
AIB Group UK (plc) (1) 52 870 -818
Bank of Ireland (2) 147 676 -529
Bank of Scotland 5,756 4,462 1,294
Barclays 14,363 18,783 -4,420
Clydesdale Bank (3) 2,293 9,357 -7,064
Co-operative 591 9,852 -9,261
Danske 551 547 4
Halifax 25,405 24,621 784
HSBC (4) 51,441 25,836 25,605
Lloyds Bank 15,830 21,370 -5,540
Monzo Bank 2,846 144 2,702
Nationwide 45,060 10,483 34,577
NatWest 16,749 28,802 -12,053
RBS 2,083 14,445 -12,362
Santander 18,956 19,333 -377
Starling Bank 2,003 266 1,737
Tesco Bank 1,514 947 567
TSB 5,149 21,790 -16,641
Ulster Bank 296 1,065 -769
Low volume participants 1,636 741 895

Data from the Current Account Switch Service. Does not include data for Metro Bank. (1) Includes First Trust Bank and Allied Irish Bank. (2) Includes Post Office. (3) Includes Yorkshire Bank. (4) Includes First Direct and M&S Bank.

What does TSB say?

A TSB spokesperson said: "The number of people who use the Current Account Switching Service is only part of the total picture. 

"During the three months in question we actually saw more than 20,000 customers either open a new bank account at one of our branches or switch their account to us using the CASS system."