Bank reforms make progress as new Current Account Switch Service gets ready to launch.
The Chancellor of the Exchequer has today (Tuesday 10 September) highlighted the forthcoming ‘Current Account Switch Service’ as a core part of the government’s plan to reform Britain’s banking system, ahead of its launch in just under a week.
For the first time, the new Current Account Switch Service will let consumers safely and reliably switch their accounts between banks in 7 days, with a guarantee that they will be fully protected against any financial loss in the event a problem occurs during the switch.
The government set up the ICB to identify ways to improve competition in the banking sector and implemented its major recommendations.
Low levels of switching in the UK current account market are a major barrier to competition between banks and better services for consumers.
Traditionally, people get an account and then they stick with it, as changing your account is seen as complicated, time-consuming, and risks getting you into real difficulty if it goes wrong.
75% of personal current account holders have never switched, with nearly 1 in 5 saying this was because of the hassle and potential risks.
To tackle this problem, the ICB recommended that a faster and more reliable account switching service should be introduced. The government accepted this recommendation and demanded the banking industry make this happen within two years of the ICB’s report.
Next week, and on schedule, the switching service launches across the country.
Chancellor George Osborne said:
The new 7 day switching service is central to our reforms to build a banking system that works for customers. This service was a key part of the recommendations of our Independent Commission on Banking two years ago and I’m delighted it has now become a powerful weapon for consumers.
The Current Account Switch Service works by:
- Giving customers a guarantee that they will be fully protected against any financial loss in the event a problem occurs during the switch – that makes switching safe
- Fully switching over your old account to the new one within 7 working days – that makes switching a lot faster
- Allowing you to choose the exact day your account switches; if 7 working days time is when a customer’s mortgage payment is due to be made (for example) and they are concerned about the switching happening on that date, they can choose a subsequent working day that suits them – that makes switching convenient
- Providing a 13 month redirection service, so any debits or credits mistakenly made on the old account are automatically forwarded on – that makes switching seamless
Customers wanting to switch using the new service will be able to choose from 33 current account brands across 17 participating institutions, ranging from the largest providers in the market to those with the smallest market share. The participating brands cover almost 100% of the UK’s current account market.
And the service is not just for individuals – smaller businesses and charities can use it too.