Halifax to pilot direct debit transfer scheme
08 November 2000 | 3532 views | 0
The UK's Halifax bank is to begin pilot testing an automated direct debit system designed to take the hassle out of switching current accounts.
The initiative follows the Group's announcement last month that it will launch the highest paying current account available on the High Street next January.
Research commissioned by the Halifax from NOP, found that 59% of UK adults say that "hassle" factors and worries about direct debits not being set up properly are the main reasons which deter them from switching current accounts. The research also found that 60% of those considering moving to a new bank would definitely do so if an automated transfer service was available.
Up until now, bank customers have had to do most of the work themselves and typically had to contact their electricity and telephone providers, for example, in order to complete the necessary paper work. This has always been a time consuming process, and has contributed to a high level of current account inertia.
The Halifax is moving early to take advantage of an automated direct debit transfer system initiated by the UK banking community under pressure from government and consumer affairs associations. The system, developed by the bank-owned Bacs payments body aims to link banks, building societies and direct debit originators in an automated network. It is scheduled for full-scale introduction at the end of 2001, when it will replace an interim paper-based system which has been in operation since October last year.
Under the new scheme, once customers have signed an authorisation form, the Halifax will automatically change their direct debits with a panel of companies including Norwich Union and Vodafone Connect. Nine companies have initially joined the Bacs-sponsored panel with more to follow in the coming months.
The Halifax says the new system should cut the average period for switching current accounts in half, from six weeks to three weeks.
David Fisher, general manager, banking and consumer credit, says: "This initiative is about taking the hassle out of switching current accounts. Altering direct debits has always been a nuisance for the customer and our aim is to put things right with this new system".