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Banks launch seven-day account switch after £750m systems overhaul Banks launch seven-day account switch after £750m systems overhaul
(1 day later)
Britain's 46 million current account holders will be bombarded from Monday with offers to switch banks thanks to the formal introduction of "seven-day switching", after a £750m systems overhaul to ensure direct debits and payments can be transferred between providers in the space of a week.Britain's 46 million current account holders will be bombarded from Monday with offers to switch banks thanks to the formal introduction of "seven-day switching", after a £750m systems overhaul to ensure direct debits and payments can be transferred between providers in the space of a week.
Three-quarters of current accounts are still held by the "big four" high-street banks, with the typical customer staying with a bank for 17 years – six years longer than the average length of a marriage. Fears of payments going awry has discouraged most customers from moving, even if they have endured poor service. A recent survey found that one in five people would rather go to the dentist than try to switch their current account.Three-quarters of current accounts are still held by the "big four" high-street banks, with the typical customer staying with a bank for 17 years – six years longer than the average length of a marriage. Fears of payments going awry has discouraged most customers from moving, even if they have endured poor service. A recent survey found that one in five people would rather go to the dentist than try to switch their current account.
But starting from Monday, 33 bank and building society brands will be involved in the launch of the Current Account Switch Service, backed by a multimillion-pound television advertising campaign introducing customers to a "simpler world" of switching. The Payments Council, the independent body that has spearheaded the initiative, promises that switching will become "reliable and hassle-free" and make tales of month-long delays a thing of the past.But starting from Monday, 33 bank and building society brands will be involved in the launch of the Current Account Switch Service, backed by a multimillion-pound television advertising campaign introducing customers to a "simpler world" of switching. The Payments Council, the independent body that has spearheaded the initiative, promises that switching will become "reliable and hassle-free" and make tales of month-long delays a thing of the past.
"The service will remove the need for customers to liaise with their old bank or building society when they have made the decision to switch. The new provider will take full responsibility for delivering the switch and the customer's old current account will close once the switch is complete.""The service will remove the need for customers to liaise with their old bank or building society when they have made the decision to switch. The new provider will take full responsibility for delivering the switch and the customer's old current account will close once the switch is complete."
The so-called "challenger" banks, including new entrants such as Metro Bank and Virgin but also Santander, First Direct, Halifax and Nationwide, are expected to be the biggest winners from switching.The so-called "challenger" banks, including new entrants such as Metro Bank and Virgin but also Santander, First Direct, Halifax and Nationwide, are expected to be the biggest winners from switching.
First Direct, which says that nearly all its 1.3 million current account holders have been switchers from other banks, has increased staff numbers at its account opening department in anticipation of a wave of switching, and is offering £125 to lure customers.First Direct, which says that nearly all its 1.3 million current account holders have been switchers from other banks, has increased staff numbers at its account opening department in anticipation of a wave of switching, and is offering £125 to lure customers.
Tracy Garrad, head of First Direct, said: "We don't expect there will be hundreds of thousands of people switching overnight, but we do expect to be high on the list for anyone switching. It's still amazing that around 44% of people have never switched their bank account."Tracy Garrad, head of First Direct, said: "We don't expect there will be hundreds of thousands of people switching overnight, but we do expect to be high on the list for anyone switching. It's still amazing that around 44% of people have never switched their bank account."
Santander is aggressively marketing its 123 account that pays customers interest of up to 3% on deposits of up to £20,000 held in current accounts, while Halifax is offering £100 to people who switch to its Reward account.Santander is aggressively marketing its 123 account that pays customers interest of up to 3% on deposits of up to £20,000 held in current accounts, while Halifax is offering £100 to people who switch to its Reward account.
Martin Lewis, creator of MoneySavingExpert.com, said: "Far too many people whinge that their bank is a bastard, but then do nothing about it. A whole swath of the country still has the same bank account they set up as a child on the back of being given a piggy bank. Don't whinge, ditch and switch."Martin Lewis, creator of MoneySavingExpert.com, said: "Far too many people whinge that their bank is a bastard, but then do nothing about it. A whole swath of the country still has the same bank account they set up as a child on the back of being given a piggy bank. Don't whinge, ditch and switch."
Last year, about 2m current account switches took place in Britain, against a total of 80m current accounts in operation (many people have more than one account). Research by business analytics company SAS, based on a YouGov survey, suggests that around 5m accounts may switch in the next 12 months.Last year, about 2m current account switches took place in Britain, against a total of 80m current accounts in operation (many people have more than one account). Research by business analytics company SAS, based on a YouGov survey, suggests that around 5m accounts may switch in the next 12 months.
But critics say that the new switching regime will fail to break the stranglehold of the major banks on Britain's current accounts. Conservative MP Andrea Leadsom, a member of the Treasury select committee, said that customers would still have to get new sort codes and account numbers. She is calling for full number portability, in much the same way as customers of mobile phone networks can switch provider but retain their telephone number.But critics say that the new switching regime will fail to break the stranglehold of the major banks on Britain's current accounts. Conservative MP Andrea Leadsom, a member of the Treasury select committee, said that customers would still have to get new sort codes and account numbers. She is calling for full number portability, in much the same way as customers of mobile phone networks can switch provider but retain their telephone number.
The Money Advice Service, an independent organisation funded through the Financial Conduct Authority has launched a current account comparison service, at moneyadviceservice.org.uk.The Money Advice Service, an independent organisation funded through the Financial Conduct Authority has launched a current account comparison service, at moneyadviceservice.org.uk.
Commentary Reform doesn't go far enoughCommentary Reform doesn't go far enough
Seven-day switching is well worth doing, but if we really want to take away all the hassle of moving from one provider to another, if we really want the kind of competition that keeps bank managers up at night wondering if they will have any customers in the morning, we need full number portability just like in the mobile phone market.Seven-day switching is well worth doing, but if we really want to take away all the hassle of moving from one provider to another, if we really want the kind of competition that keeps bank managers up at night wondering if they will have any customers in the morning, we need full number portability just like in the mobile phone market.
We need to create a separate system that holds everybody's bank details. It means, for instance, that my bank account number and sort code become a unique number, which is then accessed by individual banks.We need to create a separate system that holds everybody's bank details. It means, for instance, that my bank account number and sort code become a unique number, which is then accessed by individual banks.
At the moment banks hold the data and share it though the VocaLink system. But if our details sat on Vocalink, independent of the banks, all customers' banks would have equal access. At the moment second-tier banks such as Virgin are charged by the clearing banks for access.At the moment banks hold the data and share it though the VocaLink system. But if our details sat on Vocalink, independent of the banks, all customers' banks would have equal access. At the moment second-tier banks such as Virgin are charged by the clearing banks for access.
There are so many benefits from this change. Existing systems are a tangle of legacy IT systems dating back to countless mergers by banks. Not only do they make payment systems slow and switching difficult, they are also open to fraud. It would also mean that when a bank goes bust, the government can avoid the inevitable queues down the street because the accounts are switched to another provider without the bust bank doing anything.There are so many benefits from this change. Existing systems are a tangle of legacy IT systems dating back to countless mergers by banks. Not only do they make payment systems slow and switching difficult, they are also open to fraud. It would also mean that when a bank goes bust, the government can avoid the inevitable queues down the street because the accounts are switched to another provider without the bust bank doing anything.
Andrea Leadsom, Conservative MP for South Northamptonshire was speaking to Phillip InmanAndrea Leadsom, Conservative MP for South Northamptonshire was speaking to Phillip Inman
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