New bank account rules to save customers £200mNew system to beat unpaid item charges

07 June 2013

Clock with tick

Changes to the way that Britain's biggest banks process payments look set to save current account holders £200m in charges and fees, the financial regulator announced today. 

The Financial Conduct Authority (FCA) has brokered a commitment from seven banking groups to make their systems for processing payments more flexible.

Changes to payments processing

Under the present system, payments into and out of current accounts are generally processed early in the morning. 

Consequently, money arriving later in the day (such as a deposit or monthly salary), isn't registered in the account until the following morning. 

This means that even where a customer covers an outgoing payment on the day it's due to be paid, they can face an unpaid item charge for going overdrawn. 

Under a new 'retry' system, a payment started in the morning will be re-attempted in the afternoon if necessary funds haven't reached the account. This should reduce the costs to customers caused by processing delays.

Unpaid item charges cost £200m

This problem is estimated by the FCA to cost consumers around £200m every year. The voluntary agreement has been secured with Barclays, the Co-operative, HSBC, Nationwide, RBS and National Australia Group (which owns Clydesdale and Yorkshire Banks). Lloyds Banking Group currently has a retry system in place, but this only applies to direct debits. Standing orders are still processed on the following day.

Under the voluntary agreement, 99% of customers should have the benefit of this new flexibility. 

Which? executive director, Richard Lloyd, said: 'We welcome this move from the FCA which should reduce the number of unnecessary bank charges consumers are hit with. 

'It is good to see the banks using faster payments to benefit their customers.'

This story was updated on 11/06/2013 to reflect the fact that Lloyds Banking Group does not use the retry system for all of its payments, only for direct debits. Lloyds has committed to updating its systems to retry standing orders on the same day, but this process is not in place yet.
As an interim measure, the FCA told Which? that Lloyds has agreed to refund late payment charges incurred by customers, which would have prevented with a same day retry in place.

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