Banks launch seven-day account switching service
Published on 16 September 2013 11:00 AM
Banks launch new seven-day account switching service designed to make it easier for customers to change bank accounts.
The banking industry will introduce new rules on Monday which place the responsibility on banks to provide a simpler process for all users looking to change their bank accounts.
The new initiative comes after findings in the My Bank Account & Me report show more than a quarter of UK current account holders (27%) use the same provider as one of their parents, while only 6% of customers have switched their current account in the past two years - compared to 37% who have switched car insurance provider.
The Payments Council, the independent body spearheading the new Current Account Switch Service, say the new process will be faster, simpler and more reliable, while also leading to an increase in competition on the high street.
Single point of contact
The new rules will provide a consistent process for the first time for all customers looking to change their bank account.
The switch will be managed in full by the new bank, which means customers will have a single point of contact and do not need to speak to their old bank.
The participating banks and building societies will also be responsible for ensuring the switching process only takes seven working days once the new account is open and the switch date chosen and agreed.
Payments accidently made to the old account will automatically be redirected to the new account for a period of 13 months, and any electronic payments sent via Faster Payments using the old account details will have this information automatically updated to align with the customer's new account details.
Banks will also be responsible for transferring internet banking payee details held on the customer's old online bank account.
The Current Account Switch Guarantee will underpin the new service, which will entitle customers to a refund of any interest and charges incurred should anything go wrong with the switch.
Age UK welcomes the new service: 'The new Current Account Switch Service should make it far easier for older people to switch their bank accounts.
'For older people, managing their finances on a fixed income, getting the best deal you can from your account can make a difference.
'Hopefully this new service will encourage more people to shop around and banks to offer better deals for older people.'
Calls for full Account Number Portability
Prior to the launch of the new initiative, the switching service would vary from bank to bank and it could typically take between 18 and 30 days. Customers would also worry that a company could attempt to process a direct debit from the old account, which could lead to unexpected charges.
However, some critics have argued that the rules do not go far enough by not offering full Account Number Portability, which would allow customers to retain their old account number and sort code.
Conservative MP Andrea Leadsom, a member of the Treasury select committee, said: ‘Wouldn't it be great if you could change your bank account from one bank to another at the touch of a button?
‘So if you were fed up with the service your bank was providing or you wanted to take advantage of a great offer at another bank you would be able to switch without having to worry about changing all your direct debits, standing orders, cheque books, cards, account number etc.'