Current account switching guarantee for customers
The organisation, which oversees payment services in the UK, has launched the Current Account Switch Guarantee and Trustmark ahead of new rules on switching due to be introduced in September 2013.
At present it can take between 18 and 30 days to switch accounts, but the Payments Council is introducing its Current Account Switch Service in September, that guarantees switching will take only seven working days.
Ahead of that, the new trustmark will also inform customers they can expect a simple, hassle-free experience during the switching process. It guarantees that:
- 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.
Confidence to switch
Adrian Kamellard, chief executive of the Payments Council, said: "Giving customers the confidence to switch current accounts is one of our main goals and the new Guarantee and Trustmark should really help achieve this regardless of whom you switch to or from.
"It sets out in simple terms what you should expect and how long it will take, with the added peace of mind that should anything go wrong your new current account provider is responsible to you for putting things right."
Kevin Mountford, head of banking at MoneySupermarket, said: "This heralds a major milestone ahead of the ‘seven day' switching process being introduced in September. The Guarantee and Trustmark provides reassurance and redress should things go wrong. Although in reality switching is usually relatively straight forward, this move could be a real turning point in improving switching rates in the current account market."
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.