Homeowners could be given the right to switch their mortgage within a week, under government plans to make markets work better.
David Cameron promised a range of consumer-friendly legislation in the Queen’s speech. The government is to announce on Wednesday a consultation on plans to force the providers of a range of services – from broadband to mortgages – to make it easier, and faster, for their customers to switch.
Ministers believe consumers are missing out on the cheapest deals, whether in telecoms, energy or financial services, because the process of moving from one company to another is too onerous or complex.
Sajid Javid, the business secretary, said: “I want to give consumers more power over switching providers for the services they rely on to make sure they are getting the best deals.
“At the moment the time it takes to switch depends on which service you are switching. I want to hear what consumers and businesses think of making switching quicker and more consistent across all markets.”
The government already imposes a time limit on switching of seven working days for some products and services, including current accounts and mobile phone contracts. It wants to examine whether a similar approach would work more widely, including with mortgages.
“The new call for evidence launched today aims to understand the specifics of switching across different sectors, including what processes are in place to ensure a secure and reliable switch, how quickly that switch can take place, and what forms of redress would be appropriate to compensate consumers if a switch goes wrong,” said a statement issued jointly by the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport.
Cameron is keen to show the government still has fresh ideas for reforming the economy, with his party deeply divided over Britain’s future in the run-up to June’s EU referendum. Once finalised, the plans will be enshrined in a better markets bill.
A cap on energy prices was a central plank of Labour’s general election manifesto, as Ed Miliband sought to crack down on predatory firms exploiting their customers. But the Conservatives prefer to rely on consumers to penalise more costly providers by taking their custom elsewhere.
Legislation announced in the Queen’s speech last week also included plans for broadband firms to be forced to compensate customers automatically for service failures; and for mobile phone providers to be prevented from charging customers to unlock their phones at the end of a contract.
Alex Neill of consumer group Which? said: “Quicker switching will give people more power to force banks, energy suppliers and telecoms providers to up their game or lose their custom.
“The government should swiftly implement these plans and introduce a new ombudsman to deal with air and rail passengers’ complaints.”
John Whittingdale, the culture secretary, said he was also looking at plans to ensure broadband speeds for individual properties would be made public so that house-hunters can check whether they are about to move into an broadband dead zone.
Whittingdale said: “We are more reliant on broadband and phone services than ever before. So we want it to be as easy as possible for consumers to spot the best deal for them, and switch providers quickly and easily if they want to.”
The number of people switching their current accounts from one bank to another has increased significantly since seven-day switching was introduced in 2013.
The latest figures from Bankers Automated Clearing Services (Bacs) showed that 124,615 people switched their current accounts in March, 10% more than in the same month last year.
Labour’s approach to markets such as financial services and energy under Jeremy Corbyn is as yet unclear, but the shadow chancellor, John McDonnell, recently announced he was in favour of regulations to cap rents, suggesting the party may favour a more interventionist approach.
