Why finding the right current account is about to get simpler

cash-monies
Find out what the right current account can mean for you in pounds and pence
"Comparison sites won't be able to read or store the data, so customers can compare bank accounts without giving their details to any third parties"
  • | by Emily Bater

Imagine being told in pounds and pence what the right current account can do for you, without having to fire your calculator up to do some hardcore sums.

Well, that's what a new comparison tool  announced today by the chancellor in his Autumn Statement is set to do, and Gocompare.com will be the first to offer it.

The government scheme - called midata - will allow customers to download up to 12 months' worth of transactions data in a simple format.

This data can then be easily loaded into a comparison site, giving an enhanced comparison based on actual data rather than modelling or predictions.

This should allow customers to see the actual pounds and pence cost or benefit they'll get from switching to each of the available accounts.

What is midata?

You may not have heard of midata, but it's been floating around in one way or another since 2011, feeding into the government's overriding programme of providing better information and protection for consumers.

Customers have proved reluctant to switch their current account provider, despite government initiatives such as the 2013 seven-day current account switch guarantee.

It's hoped that midata will make customers more informed when it comes to bank accounts, and therefore more likely to consider switching.

The Department for Business, Innovation and Skills (BIS) has described midata as "a major breakthrough in empowering consumers and increasing competition in high street banking".

It's hoped that midata will be extended to further personal finance areas in the future, including mobile phone contracts, credit cards and energy.

How will it work?

Customers will click the 'midata' icon on a comparison website such as Gocompare.com, giving permission for the relevant data - bank statements in the case of current accounts - to be downloaded to the site's system. All of the UK's major banks have already signed up to the service.

Comparison sites won't be able to read or store the encrypted data, so customers can be sure that their details won't be passed on to any third parties.

Over 1,500 calculations relating to customer's spending habits will then be made by examining 33 different types of transactions which are basically the things that banks charge you for - all foreign usage fees, for example, plus any overdraft charges, cheque return fees and standing order charges.

A comparison service will trawl the current account market, then give consumers a table showing the options available to them, with costs and benefits based on their actual banking habits.

"By enabling our customers to use their actual current account data we can provide more meaningful product comparisons and help them to find what's really right for them," said Gocompare.com's Matt Sanders.

"Midata will make current account switching simpler and better, connecting an individual's banking patterns with the right deals. Gocompare.com will be at the forefront of developments when midata hits the market in 2015.

"It will force banks and building societies into offering bank accounts that customers really want and need."

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