UK Payments Council sets September date for account switching
The UK Payments Council has set a date for the introduction of the seven-day account switching service, which will make it easier for UK customers to switch their bank.
Due to be introduced on 16 September, the service is being implemented by 33 banks and building societies, between them accounting for nearly 100% of the UK current account market. The core element of the service consists of an obligation on the banks to move a customer account to another bank within a maximum period of seven days, should the customer wish to do so.
The switching service is backed by the Payments Council’s current account switch guarantee, which sets out the terms of the switch. The customer simply informs their chosen new bank of their desire to switch, and provides details of their old account. The customer then needs take no further action, as the rest of the process, including moving across standing orders and direct debits, is handled by the new bank. There is no need for the customer to inform the old bank of the switch.
Participating institutions such as Nationwide Building Society keep customers updated via regular text messages during the switchover process. The first stage is informing the customer that a complete list of direct debits and standing orders has been obtained from the old bank. The next stage involves contacting the customer’s direct debit companies and setting up standing orders. The direct debit companies then update their details. The final stage consists of two forms for the customer. The first enables them to have their wages put into the new account. The second enables them to close their old account.
“After two years of work and commitment by the Payments Council and financial institutions to develop this new standardised switching service, today marks a significant day for all parties involved,” said Adrian Kamellard, chief executive of the Payments Council. “There is now just one month to go until the launch of the current account switch service and as final preparations are made for launch we look forward to a new era of account switching which will lead to greater choice for customers and wider competition in the marketplace.”
Some politicians, such as Andrea Leadsom, Conservative MP for South Northamptonshire, are still calling for a further step, the creation of direct account portability, in which the customer would keep the same account number. However, Kamellard has expressed satisfaction that the main objective of competition has been already substantially been achieved by seven-day account switching, while others point out that account portability would require difficult reforms since sort codes refer to specific bank branches, and are embedded into the cheque process.