Today, marks the launch of one of the biggest shake-ups of the banking markets for years – the Current Account Switch Service, which promises to give consumers a fairer deal by cutting red tape and boosting transparency in the industry.
It is hoped that the new service will eliminate some of the barriers to switching that have prevented people from doing so in the past – such as the complexity of the process, the time taken for the moves to occur, and the risks associated with some things being overlooked.
Who will it affect?
Every person with a current account in the UK (around 46 million people) will be eligible to take part in the scheme, which the Payments Council says will help to address the dearth of current account switchers across the country. Last year, only two million people switched their account, compared to the tens of millions who changed insurance provider.
How will it work and how will it affect me?
Quite simply, it will transfer every facet of a person’s current bank account to another bank or building society, including standing orders paid in or out, direct debits, wages and any other payments. The only difference will be that the customer and their account will be subject to the new rates and terms set by their new provider. Any money owed to the old bank (such as outstanding charges) must be paid first.
What do I need to do?
Very little – the scheme is designed to make it as easy as possible for people to switch and begin benefitting from terms and rates that better suit them. Consumers simply need to contact the new bank and provide their current details, and the new bank will do the rest – this ranges from contacting employers to arrange salaries to be paid into different accounts, to arranging for new cards to be sent out, to setting up a ‘switching date’ when the changes will come into effect.
How long will the process take?
Previously, the process could take up to a month, which put many people off switching altogether, but under the new scheme the transfer will take seven days from the point the application is received by the new bank. If the customer will be away on that date (on holiday, for example) they should be able to choose their own date.
Who is taking part?
The vast majority of banks and building societies operating in the UK are taking part in the scheme. Those that do will offer the Current Account Switch Guarantee – a Trustmark that will appear in branch, online and in supporting literature, and explain the benefits of the service. A full list of the banks and building societies that will implement the Current Account Switch Service from September 16th is available from the Payments Council website.
What if problems occur?
Under the terms of the new scheme, current account providers will be responsible for ensuring that all aspects of a customer’s bank account is switched over quickly and effectively. Where this does not occur, any charges incurred will be reversed. Also, a redirection service will be in effect for 13 months following the switching date, which will ensure any erroneous payments to the previous account are correctly deposited in the new account, and vice-versa.
Are there any exclusions?
In theory, the vast majority of people should be able to take part in the scheme. However, people with large overdrafts and other similar arrangements need to check the terms with their new lender, as some banks may not be as generous with the facility. In these instances, a credit check will take place, which could result in the application being denied.
Who will benefit?
Mainly, the customer. The new scheme is one of the biggest ever shake-ups of the consumer banking industry and designed to provide a fairer deal and greater clarity to all. Other beneficiaries are likely to be banks which currently have a smaller market share but will likely pull in new customers thanks to their special offers and the increased ease of switching.
More information on the best current account deals on the market are available here.