Partner Article

Launch of new current account switching service imminent

The UK’s 46 million current account holders will be able to switch banks in seven days from next month.

After two years of preparation, the Payments Council has confirmed a new switching service will start on 16 September.

Until now, transferring an account to a new provider has taken up to 30 days.

The Independent Commission on Banking recommended the change, and now 17 banks, involving 33 different brands - accounting for virtually 100% of the current account marketplace - are promising consumers a quicker and hassle-free service.

In anticipation of the new scheme, two banks are already offering customers an incentive of up to £125 to switch their current accounts to them.

Adrian Kamellard, Chief Executive of the Payments Council,comments: “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.

“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.”

Last year, some two million people switched their account, roughly 2.5% of the total.

The government would like to see more people switching their current accounts to smaller banks to alleviate the grip the ‘Big Four’ have on the market and stimulate competition.

Lloyds Banking Group, Barclays, Royal Bank of Scotland and HSBC have a near 75% share of all current accounts, according to figures from the Office of Fair Trading.

Account holders are being advised to contact their new bank, who will do all the switching for them.

Or they can go on the website Simplerworld, where they can select a new provider.

The new provider will arrange for all direct debits and standing orders to be redirected to the new account.

Payments in, such as from an employer, will also be redirected.

This service, known as ‘account porting’, will continue for a period of 13 months, to cover any once-a-year payments, such as insurance premiums or the television licence fee.

But already two banks are offering customers a cash incentive to switch to them. First Direct has increased its offer to new joiners from £100 to £125.

The Halifax is already offering a £100 incentive to new account holders.

Mr Kamellard added: “We look forward to a new era of account switching which will lead to greater choice for customers and wider competition in the marketplace.”

This was posted in Bdaily's Members' News section by Graham Vincent .