LONDON (Reuters) - Annual account summaries have failed to spur banking competition and the use of text messages and mobile device apps is more effective in changing behaviour of Britain’s middle classes, a top financial regulator said on Wednesday.
Martin Wheatley, chief executive of the Financial Conduct Authority (FCA), announced new research showing that annual summaries had failed to persuade more people to switch banks and said the watchdog is now looking at new ways to increase the impact of information provided by banks to their customers.
“Statistical analysis ... shows that annual summaries have no influence at all on consumer behaviour in terms of avoiding overdraft charges, improving balance levels or prompting switching between providers,” Wheatley said in a speech in Scotland.
However, text alerts and mobile banking apps seem to reduce the amount of unarranged overdraft charges incurred by customers, he added.
“The other great advantage seems to be that text alerts and banking apps also encourage customers to shift their balances from no, or low, credit interest accounts,” Wheatley said.
Analysis showed it was typically middle-aged consumers with higher incomes who tend to pay the most overdraft charges, switch the least and, in turn, benefit most from text alerts and mobile device apps.
“This is not just a low-income policy challenge, although the personal impact here on poorer consumers will clearly be felt more keenly. Overdraft charges are actually affecting swathes of middle-Britain,” Wheatley said.
The research will be used by the FCA to shape future policy.
Reporting by Huw Jones; Editing by David Goodman