You can now switch your current account provider in just seven working days, thanks to a new, guaranteed switching service launched today.
The service standardises the process of switching current account across the majority of high-street banks, providing a consistent and simpler service for customers to switch account.
Customers will now only need to deal with their new bank under the new process.
Participating banks, will abide by a new ‘Current Account Switch Guarantee’, that details the benefits of the new service and what customers are entitled to if anything goes wrong during and after switching bank account.
You can find out more about the service in our guide to switching your current account.
Why has the new switching service been launched?
Under the old rules, it could take anywhere between 18 and 30 days to switch current account. Few people actually switch accounts – as little as 3% changed provider in 2012, while it’s estimated that people stay with the same current account for an average of 26 years.
The new service was launched after a recommendation by the Independent Commission for Banking in 2011. It has been designed to give customers the confidence to switch accounts without any hassle.
The hope is that the service will increase competition in the current account market. Currently, the four big banks – Lloyds Banking Group, Barclays, HSBC and NatWest/RBS – own a 75% share of the market.
Current Account Switch Guarantee
The new switching service will provide a consistent service for all customers and is outlined by a Current Account Switch Guarantee which includes the following:
- The Service is free to use and you can choose and agree your switch date with the new bank.
- The new bank will take care of moving all your payments going out (e.g. Direct Debit and standing orders) and those coming in (e.g. your salary).
- If you have money in your old account, the new bank will be responsible to transfer it to your new account on the agreed switch date.
- For 13 months, the new bank will arrange for payments accidentally made to you old account to be automatically redirected to your new account. The new bank will also contact the sender and give them your new account details.
- The responsibility lies with the new bank to contact you before the switch date if there are any issues.
- If there any problems with the switch the new bank will refund any interest (paid or lost ) and charges made on either your old or new accounts as result of the failure
Finding the best current account
If you are looking to switch current account, there are some good deals on the market. We show the best deals for a variety of scenarios:
- Best bank accounts for credit interest – best deals for accounts paying interest to customers who stay in credit.
- Best bank accounts for authorised overdrafts – best deals for customers who go in to the red each month.
- Fee-charging bank accounts – we rate packaged current accounts for their perks and how much they cost.
New service not enough to transform the banking industry, says Which?
Richard Lloyd, executive director at Which?, said that making it simpler to switch banks means ‘it will be easier for people to vote with their feet’ but that the new service alone is not enough to transform competition in banking.
‘While new incentives from the banks look tempting, consumers shouldn’t let this be the sole basis of their decision because switching to the wrong account could cost far more in the long run.
‘Banks should make it simple to compare current accounts so people can pick the one that’s right for them.’
Which? will be monitoring the new switching process and has developed seven tests to assess how it is working for customers:
- Seven days – does the switching process work?
- Willing – are more people switching?
- Innovation – has it led to new products and service?
- Trust – do people have more confidence in the switching process?
- Competition – is this shaking up the market?
- Hassle-free – what happens when things go wrong?
- ? – did people get a better deal and are they happy with their provider?