'Retry' process saves customers £200 million in overaft fees since launch

Source: Payments UK

A ‘retry process’ that helps bank and building society customers avoid unpaid payment charges has saved them at least £200 million in the 12 months since its use was extended across the banking industry in September 2014.

The retry process automatically operates if a customer’s Standing Order, Direct Debit or Future-Dated Payment doesn’t get paid because of insufficient funds in their account. In this situation the customer’s bank or building society will process the payment again, later the same day. This gives the customer a window of opportunity to pay cleared funds into their account, meaning that the ‘retried’ payment will be successfully processed the second time around, and the customer will avoid incurring an unpaid payment fee. In the 12 months from 1 October 2014 approximately 25 million payments, which initially failed, were successfully paid using the retry service.

All participating banks and building societies give customers until at least 2pm to pay cleared funds into their account, but this is the minimum that they offer - some offer a cut-off time later than 2pm. Customers can find out their account’s cut-off time by contacting their bank or building society or checking their website. Introduction of the retry process was the result of a collaborative banking industry initiative, led by the Payments Council - which was succeeded by Payments UK in June 2015 - in response to customer-demand. It fulfilled a commitment made to the Financial Services Authority (FSA) - now the Financial Conduct Authority (FCA) - to introduce an industry-wide retry process for pre-notified payments and built on an agreement reached in June 2013 between the FCA and seven of the UK’s biggest high street banks for them to use a same-day retry process.

To help customers manage their current account efficiently, Payments UK has produced a guide, {downloadable from www.paymentsuk.org.uk}, which covers: what the retry process is; how it benefits customers; and a number of tips to help customers, such as:

• If you need to pay ‘cleared funds’ into your account, the fastest way is by paying cash in to your own bank or by making a Faster Payment via your online or phone banking service.
• Contact your bank or building society to confirm what the cut-off time is for you to get cleared funds into your account before the payment is retried.
• Review your account’s outgoing payments and if any are regularly leaving your account on an inconvenient date, move them to a more suitable day.
• Some banks and building societies will get in touch with you if one of your payments fails to advise you that you need to pay cleared funds into your account by a certain time - if you would find such a service useful check with your provider to see if they provide it, and if they don’t you may want to shop around to find a bank or building society that does.
Jonathan Davidson, Director of Supervision - Retail and Authorisations at the FCA, said:
“This simple change has had a positive impact on consumers; saving them money and allowing them to manage their finances better. It is a good example of how banks can work together to make a real difference for customers and demonstrate the benefits of collaboration between all parts of the industry.”

Maurice Cleaves, Chief Executive of Payments UK, said:

“Customer savings of more than £200 million in unpaid payment fees is testament to the success of the retry process being used across the banking industry. This process has given customers more control, acting as a useful safety net for those situations where they do not have enough money in their account. This said, if you find yourself regularly taking advantage of the retry process, I would strongly recommend reviewing the timing of your payments so that they leave your account on a more suitable day.”

The retry process helps to give customers more control with regard to meeting their commitments, thus avoiding ‘bounced’ payments and any resulting fees. The retry process relates to payments that are pre-notified (i.e. Standing Orders, Direct Debits and Future-Dated Payments), so cheques are not included. However, banks and building societies can compete on this - so some may choose to include cheques as part of their individual retry process.

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