Have you been put off switching your bank account because of the hassle? Perhaps it’s now time for a change! The new 7-day switching system introduced in September makes it easier to switch current accounts than ever before. If you’re interested in switching banks, read on to find out more!
The New Current Account Switching Process
1. From September, banks have just seven days to arrange a current account transfer – just a quarter of the time it used to take.
2. You only need to deal with a new bank to organise the switch.
When applying for a new current account, details about Direct Debits or other payment orders can be left with the new bank, which will take care of the arrangements.
3. Any payments to or from an old account will be automatically redirected to the new one.
If an employer doesn’t update your account details in time for your next payday, it’s no problem! Payments involving the old account will be automatically redirected for 13 months and your new bank will update the source with your new details each time this happens.
4. If any aspect of the transfer goes wrong, customers are guaranteed to have any bank charges refunded.
Some banks may even continue to offer goodwill gesture payments if they fail to perform the transfer correctly and on time.
Why is Change Necessary?
UK: Four banks control roughly 75% of the current account market.
In the UK, four high-street banks – HSBC, Barclays, RBS, and Lloyds – dominate the market for current accounts.
These banking groups include NatWest, Halifax, and the Bank of Scotland, so it shows how competition has shrunk following the mergers that have taken place since the start of the financial crisis.
Smaller “challenger” banks have made some inroads in recent months, as disgruntled customers of the scandal-struck banks have turned towards smaller providers.
But the Office of Fair Trading remains convinced that major changes are still needed in the personal current account market. It is holding back on referring the issue to the Competition Commission until it determines how successful the new switching system has been.
Europe: Improving Competition throughout the EU.
The European Commission has demanded a 15-day switching service across member states by 2014 to force the banking sector to become more co-operative and more competitive.
The UK has gone further and faster than this. Thanks to the Payments Council, which has invested more than £750 million into the new service, the seven-day switching service was introduced a year ahead of this deadline.
In May 2013, it was revealed that the Council’s interventions had prompted a revision of the ISO 20022 global standard that ensures the reliable transfer of financial data.
Research: Consumers Need Change
Source: Payments Council, Account Switching – Quantitative Market Research Results, September 2012.
The Council’s research identified the key concerns that consumers have over switching accounts – namely that switching was too slow, too cumbersome, and too error-ridden.
The faster switching process, with its automated redirection service and a guaranteed refund if complications arise, is designed to assuage these concerns.
Which Banks / Building Societies Are Taking Part?
The banks signed up to the switching system at launch are listed in the table below (last updated 10 January). Tesco Bank is expected to join the system when its current account is closer to launch.
|Adam & Company||Lloyds|
|Allied Irish Bank (GB)||M&S Bank|
|Bank of Ireland UK||Metro Bank|
|Bank of Scotland||Nationwide Building Society|
|C. Hoare & Co.||Post Office|
|Clydesdale Bank||RBS International|
|Cumberland Building Society||Santander|
|Danske Bank (Northern Bank Ltd)||smile|
|Danske Bank (London Branch)||The Co-operative Bank|
|First Direct||The Royal Bank of Scotland|
|First Trust Bank||TSB|
|HSBC Bank Plc||Yorkshire Bank|
|Isle of Man Bank|
Ensuring a Swift Transfer
In the opening months of the new service, banks and building societies have reported that mismatching information has been the biggest cause of delays. How can customers ensure a swift transfer?
Provide a Recent Statement
If customers apply for a new account with a recently changed name or address that is not listed with their old bank, it will be more problematic for banks to authorise the switch.
Banks are recommending that customers provide a recent bank statement to the new current account provider to ensure that the details match up.
Provide Debit Card Details
Customers can also speed up the transfer by providing the details of their existing debit card to their new bank or building society, which will allow the necessary checks to be done more quickly.
Over 300,000 customers switched current accounts in the last three months of 2013. Are you ready to join them? For the latest current account offers, check our current listings on Which4U.