* Number of customers switching banks up 12 pct in 2014
* Santander biggest net gainer of customers in Q2, 2014
* Barclays and Co-operative Bank lost most customers
By Matt Scuffham
LONDON, Jan 22 (Reuters) - The number of Britons switching bank accounts grew by 12 percent to 1.16 million in 2014, marking progress in the government’s push to boost competition, the Payments Council said on Thursday.
Rules introduced in 2013 to ensure customers can switch accounts within seven working days are part of a range of measures to stimulate competition to Britain’s dominant big banks, whose reputations have been tarnished by scandals ranging from mis-selling to rate-rigging.
“The number of people switching banks continues to grow, showing that customers are prepared to move banks to get a better deal. This is great news for competition in banking” said junior UK finance minister Andrea Leadsom.
Britain’s competition watchdog could impose more onerous measures, such as breaking up the country’s biggest banks if initiatives such as seven-day switching fail to increase competition sufficiently.
The country’s biggest four lenders -- Lloyds Banking Group , Royal Bank of Scotland, Barclays and HSBC -- control about 77 percent of Britain’s current accounts, the Competition and Markets Authority said in a report last November.
The Payments Council, which is responsible for the account-switching service, published data showing how many customers banks gained and lost during the second quarter of last year.
Santander attracted the most net new accounts, while Barclays and the Co-operative Bank lost the most customers.
Santander has benefited from the popularity of its 1-2-3 current account, advertised in a television campaign featuring the world No.1 golfer Rory McIlroy and Formula One champion Lewis Hamilton.
It made a net gain of 59,922 customers during the period. Halifax, owned by Lloyds Banking Group, was the second-biggest net gainer, adding 15,125 accounts.
Barclays had a net loss of 22,119 customers during the period and the Co-operative Bank lost 19,103.
Co-op Bank lost customers last year after falling under the control of U.S. hedge funds when a 1.5 billion pound ($2.27 billion) capital shortfall left it fighting for survival.
The Payments Council said that 69 percent of Britons now knew about seven-day switching, up from 59 percent at the end of 2013, and that growing numbers have confidence that the process works. ($1 = 0.6619 pounds) (Editing by David Goodman)