The Payments Council have formed an agreement with over 30 leading UK banks and building societies to make transferring bank accounts easier. Rather than the weeks that customers currently have to wait, the new rules will revamp the system until it takes a mere seven days. The spokesman for the Payments council, Mark Bowerman, is confident in the new scheme’s abilities to help consumers. “We are going to make it simpler, quicker and hassle-free for consumers, SMEs and charities to change their account from one bank to another.”
At present, the process can take up to 30 days, with the minimum amount of time waiting standing at about 18 days. The hassle caused by the current delay ranges from missed payments to lost deposits. The new system should eradicate these issues. “If anyone puts money into the old account during the switch, it will be automatically redirected to the new one,” Bowerman explained. “And the payer will be sent a message informing them to update their records with your new account details.”
Possibly the most attractive part of the scheme is the fact that it will be backed by a guarantee, ensuring that if anything goes awry, the bank will pay the customer any money that is lost or any charges that have been incurred by accident. The idea is that the process will not have to cost the consumer any more than it has to.
The new style of transferring accounts, named the Current Account Switch Service, has taken two years to formulate. The move was sparked by the 2011 Independent Commission on Banking report, which criticised the lack of competition between banks in the UK, asked for more innovative methods of financing and recommended a decrease of the market share for Lloyds, RBS, HSBC and Barclays.
By making switching accounts easier, the Payments Council are encouraging competition between banks to create a better current account.
Bowerman emphasises the advantage of this system. “One of reasons why companies don’t switch at the moment is that they say every current account is the same. We are creating a more competitive marketplace. By making it simpler to change, challenger banks will find it easier to win customers currently owned by the Big Four by using creating innovative new products and services. This in turn will force the incumbents to innovate and offer better deals. Small businesses are the real winners here.”