The UK Payments Council recently said the banking industry will provide “hassle-free” account switching to consumers starting in September following a £750 million campaign on infrastructure changes and a national advertising blitz.
As part of the UK payments and banking industry shake-up, regulators pushed financial institutions to make a bank switch easier for consumers. Under the new system, creating a new checking account should take no more than seven business days, down previously from anywhere between 18 and 30 days.
Adrian Kamellard, chief executive of the Payments Council commented on the scale of the changes:
“Although the service will make life simple for customers, delivering it has involved massive systems changes both centrally and within individual financial institutions. This project, along with the national advertising campaign to raise awareness of the new service, represents an investment of more than £750 million.”
In addition to improving transition times, consumers are also guaranteed other benefits with the new system. The benefits include, but are not limited to the fact the customer’s new bank must take care of all recurring transactions such as direct debits and automatic deposits. Furthermore, for at least 13 months, the customer’s new bank must arrange for any payments that are made into the old account to be directly transferred to the new account.
While British banks are taking the lead on this project, European regulators at the European Commission began considering rules and regulation that would affect all European banks. Regulators are proposing a minimum 15-day timeframe for account transition and an independent fee comparison site where customers could compare bank fees in order to select the best account for them. However, any of the aforementioned changes would not come into effect until 2016.
Though increased competition in the U.K. banking sector has been on the cards for much of the past year, the announcement that the new system to allow customers to efficiently change banks will be ready in a few months is a clear sign that the government’s push to open up the market is working.
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