Date set for current account switch service launch
New rules designed to make it easier for consumers to switch current account providers are now just a month away.
The Payments Council has announced that its Current Account Switch Service will come into force on Friday 16 September. The new rules include a number of improvements to the current switching process, including:
- Customers will be able to set a date that suits them to have their account switched over.
- Switching will be faster, taking just seven days instead of the 18 to 30 working days it currently takes.
- A Current Account Switch Guarantee will help any customers who experience problems with the process.
- A new central redirection service will ensure any payments sent to, or attempted to be taken from, the old account after the switch date will be redirected automatically to the new account 13 months.
- The new bank manages the switching process so customers have a single point of contact for any questions and the new bank is responsible for resolving any issues.
- If a customer wants to leave a bank, their new bank can arrange everything, so there is no need to talk to the old.
Kevin Mountford, head of banking at MoneySuperMarket, said: "An easier current account switching process for consumers will go towards lowering some of the barriers which currently prevent people from switching their accounts. However, apathy still remains the biggest barrier to switching with many people sticking with low or no interest paying accounts or even worse, ones that aren't suitable for their needs."
Andrew Hagger of moneycomms.co.uk added: "Some banks charge interest for overdrawn balances whereas others charge daily/monthly fees – this is just one of the areas that makes account comparisons a nigh on impossible task for the man on the street.
"You need to look at what would benefit you most –a low cost overdraft, credit interest, cash back or cheap/free debit card abroad or in many instances perhaps all you really want is just a consistently good level of customer service."
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.
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.