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Audio: New 7-day bank account switching

Audio: New 7-day bank account switching

Category: Banking

Updated: 20/09/2013
First Published: 20/09/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Rachel Springall, finance expert at Moneyfacts.co.uk, speaks to BBC Radio Norfolk's Matthew Gudgin about the new seven-day current account switching service launched this week.

Rachel says this free-to-use service will make it easier than ever before for bank and building society customers to switch current accounts in seven days or less.



Transcript:


Matt Gudgin: Tea Time Money, and Rachel Springall is back with us from the Moneyfacts Group in Norwich. Good evening Rachel.

Rachel Springall: Evening Matthew.

MG: We've been talking about this new rule, which should make it easier for people to change their current accounts to a different bank. And we've had the National Payment Council on saying, "Oh! It's all wonderful, it's going to work well. And there'll be barely any hitches, and if there are you'll get your money back." Are you as convinced?

RS: Well, it is a new era. It's definitely a new era for bank account switches. That's because, as you say, the brand new Current Account Switch Guarantee is launched today. And what it means in real terms is it promises to finalise the process in seven working days, compared to between 18 and 30 working days previously.

MG: Are people crying out for this though, because people just don't change their banks, do they?

RS: It's something that has been around for a while. I think Government discussed it two years ago and it's taken that time for something to now be physically launched. Because there are processes in the background – it's not a simple straightforward thing to move a current account. It's easy to move a savings account or a mortgage, but current accounts are a bit more tailored.

MG: Are you confident this will work though, as they say it will?

RS: That is the hope, and there are 33 banks and building society brands involved as well. So, you're talking over 90% of the high street, of main current account lenders, all involved with the project. So, they should always have the systems to move across from each other.

MG: And we've seen things get a lot easier to switch energy bills, haven't we? But at the end of the day, there is always the suspicion that you may get a short-term gain – that they're all virtually the same anyway, so you're not getting any advantage. And there's got to be a worry that this could happen with bank accounts. I mean, where you gain on the swings, you lose on the roundabouts.

RS: Yeah, well, this is the thing. There's always a risk when you move from someone to the other. But the way the new scheme is working, that it's free to use and you can pick your own switch date with your new current account provider, means until this effective switch day you can continue using your old bank account and your old debit card. Then on your switch day, you can move on to the new one and then obviously the new pin number. You'll be given a new bank account number and a new sort code. Everything you're paying is going out as normal and payments coming in will be moved from your old account to your new account. So, you don't need to do a thing, the new bank or building society will do it for you. So, for example, your employer who obviously pays into your bank account will be contacted by that bank and be automatically switched to your new account. And the safety net of the scheme is the fact that for 13 months, any payments accidentally made to the old account will be automatically re-directed to your new account. And lastly, customers receive a refund of interest and charges on the old and new current accounts if anything goes wrong. So, there is quite a package along with it – it's not just a case of moving, and if there are potholes in-between everything should be backed up. So, if you do get charged you should be refunded, so the customer should be covered by the scheme.

MG: The banks that are competing against each other. Where are the crucial battle grounds in terms of trying to entice new customers? I've mentioned overdrafts earlier and interest rates. I mean, there is only so much wriggle room with those things.

RS: That's the thing. A lot of them will offer upfront incentives. But what people need to remember is that every time you switch you will be credit scored. So, people who regularly overdraw, you can still switch but there's no guarantee you're going to get the same overdraft facility. The scheme will bring a bit more competition into the marketplace so people are going to have to fight to keep their customers because it's easy to move around now – in the high street, for example, you will see Halifax are offering £100 to switch, whilst first direct are offering £125. And then the M&S Bank, bless them, they are offering £100 in gift cards. So, they are all upfront guarantees like, "Come to us and we'll pay you some money." But obviously these are current accounts, so people need to bear in mind they need to tailor them to their needs and their spending habits. Don't just go for incentives.

MG: And there are the eye-catching adverts as well, such as 5% interest, and then you look at the small print: on £2500 or under and it's only for a year. So, that's roughly the £100, isn't it, that they're talking about.

RS: Yeah. There is always small print and sometimes it's funding restrictions, where you need to fund your account so much. But people will find from today that there are so many new adverts out there. All the big banks were advertising in the national press this morning. All the big banks have now changed their posters in branch, so you can walk in and see the new TrustMark logo, which says there's a switch guarantee. But, if you're not sure if the new bank or building society is doing it, you just need to pop in and ask them, just to make sure.

MG: And with these special offers – if you're savvy, and I believe these incentives are going to carry on, if you change your bank account every year...

RS: Oh well...

MG: That's another £100 in the kitty.

RS: Yeah. And there is no reason to say you can't have more than one current account. Obviously if you have one with your main Direct Debits, you can keep it as your main account.

MG: Has to be funded though, doesn't it. So it's difficult to fund more than one account.

RS: I don't know how some people manage to jump from one account to the other, but you never know, you might be savvy and be able to do so. But I mean, more info is on our moneyfacts.co.uk website and we've also got some best buys for credit interests and overdrafts. So, if people are looking for the best in a certain area, they can do. But again, these are very tailored accounts, so just make sure that you're taking out the right one for you.

MG: Great. Thank you for guiding us through it Rachel, we'll see you again.

RS: Okay. Thank you.

MG: Rachel Springall is from Moneyfacts in Norwich.

What next?

Infographic: Switch your current account.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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