The UK banking industry is promising hassle-free account switching services for consumers following a £750 million spend on systems changes and a national advertising campaign.
The UK Payments Council says the new system will come into force in September and will be accompanied by a Current Account Switch Guarantee and Trustmark that will be used by all participating financial institutions.
At launch banks and building societies covering almost 100% of the competitive current account market will offer the new service, says the Council
Under the new system, current account switches will be completed within seven working days - a substantial improvement on the current process that can take between 18 and 30 days. The move follows intense pressure on the UK banking industry to improve competition in the market for retail banking services and remove barriers to entry for new providers.
The Guarantee details the key benefits of the new service, which include:
- The service is free to use
- The customer can choose and agree the switch date with their new current account provider
- The new current account provider will take care of moving all payments going out (e.g Direct Debits) and those coming in (e.g. salary)
- For 13 months the new current account provider will arrange for payments accidentally made to the old account to be automatically redirected to the new account
- If anything goes wrong with the switch, as soon as it is told the new current account provider will refund any interest and charges made on either a customer's old or new current account as a result of the failure.
Adrian Kamellard, chief executive of the Payments Council, comments: "Although the service will make life simple for customers, delivering it has involved massive systems changes both centrally and within individual financial institutions. This project, along with the national advertising campaign to raise awareness of the new service, represents an investment of more than £750 million."
In May, the European Commission proposed an EU-wide Directive on account switching that specified a minimum 15-day timeframe and an independent fee comparison Website where customers could compare bank charges. The Directive is not expected to come into force until 2016.