BCR publishes final results of the Incentivised Switching Scheme
Following the closure of the Incentivised Switching Scheme (“ISS”) on 30th June 2021, Banking Competition Remedies Ltd is providing final results on the scheme performance and information on awards granted. An update on the Capability and Innovation Fund (“CIF”) Pool F is also included.
ISS
Key points:
- In the twenty eight month life of ISS which ended on 30th June 2021, BCR has overseen the switching of 69,135 Business Current Accounts (“BCAs”) which represent in excess of 50% of the SMEs that switched through the Current Account Switching Service (“CASS”) during that period and just over 64% of the 108,000 SMEs that consented to be contacted by one or more of the participating banks. This innovative scheme which is part of the Alternative Remedies Package has proved a success, especially given the challenging external environment.
- Since the Scheme closed to new customers at the end of February 2021, 11,349 completed their switching journey.
- Total dowry of £251.54m has been paid out to date (BCA £231.13m and Loans £20.41m) which has directly benefited UK SMEs. [A total of £548k has been returned to the ISS trust during the life of the scheme where IS participants were unable to pass the dowry on to the SME].
- Full details of individual IS participant performance can be found below.
| Participant | Consents* | Switched | Net BCA Dowry Paid** | Net Loan Dowry Paid** | Award made** |
| Starling | 34,834 | 16,528 | £37.03m | £16k | £9.2m |
| Virgin Money | 54,494 | 15,946 | £54.11m | £10.08m | £8.9m |
| TSB | 32,773 | 10,731 | £29.47m | £154k | £6.0m |
| Co-op | 43,275 | 10,371 | £33.53m | £959k | |
| Santander | 24,261 | 9,137 | £45.52m | £6.49m | |
| Metro | 24,184 | 5,988 | £23.94m | £312k | |
| Handelsbanken | 1,281 | 350 | £6.26m | £1.05m | |
| Arbuthnot | 753 | 54 | £585k | £1.14m | |
| Habib | 321 | 21 | £89k | £182k | |
| Hampden | 330 | 9 | £63k | 0 | |
| Total | 216,506 | 69,135 | £230.6m | £20.38m |
* This is the gross number of consents. Customers were able to consent and apply to more than one bank.
** All figures quoted to nearest appropriate round number.
- ISS was designed to conclude when either 120,000 Business Current Accounts switched or when the BCA Dowry of £225m was spent. As can be seen, this latter target has been met. There was an additional loan dowry of £50m which, given the changes in the lending market driven by the Covid 19 crisis and the resultant intervention by the government in CBILS and BBLS for SMEs, has seen an underspend of £29.6m.
- As commented on in the March 2021 Press Release, the surplus which exists due to the underspend was always envisaged in the design of the Alternative Remedies Package although, to facilitate the largest number of SMEs being able to transfer their BCA, agreement was secured by BCR earlier this year to utilise the capacity within the Loan Dowry trust for this purpose.
- In respect of the underspend and in line with the design of the Alternative Remedies Package, based on the number of switching customers received, further awards have been made to Starling, Virgin Money and TSB for the amounts of £9.2m, £8.9m and £6m respectively. (Figures rounded to nearest £100k). These will be released upon completion of legal documentation and the monies distributed must be fully utilised by the end of December 2021 to encourage further switching in line with the business cases agreed. Any unspent funds must be returned to the Alternative Remedies Package Trust via BCR.
- The public commitments made by the awardees will be published on the BCR website before the end of August. Performance against them will be updated in October 2021 and January 2022.
Brendan Peilow, executive director at BCR with responsibility for ISS, said: “I am very pleased to record the success of the Incentivised Switching Scheme as evidenced by the full utilisation of the BCA Dowry and the fact that that over 50% of all SMEs switching through CASS during the life of ISS have done so through this scheme. The size of SMEs switching and the increased dowry on offer meant that the scheme has distributed the full BCA dowry fund available. Over £250m has gone directly to SMEs as a result of the dowries paid and the sector will further benefit from the awards that have been announced today.”
CIF
As a result of the impact of Covid on the economic environment and the changing SME lending landscape, Ebury have changed their product and origination strategy. As a result, they reduced the scope of their Business Plan to focus on investing in scalability and an improved online user experience for UK SMEs and returned £7.5m to BCR for the Capability and Innovation Fund in June 2021. Combined with the £5m returned by Onfido earlier this year BCR is now able to confirm the funds available for distribution in Pool F as £12.5m and is now consulting on the optimal grant sizes within this amount before finalising decisions and opening Pool F on 25 August.
The Pool F consultation letter can be found here. The letter includes clarification on the aspects of Pool F that are pre-determined by the ARP and, therefore, cannot be changed including the eligibility to apply and assessment criteria.
