Seven of the UK's largest financial institutions have agreed with the Financial Conduct Authority (FCA) to use a same day 're-try' system when processing customers' Direct Debits, future dated bill payments and standing orders.
Nationwide Building Society, Barclays Bank, The Co-operative Bank, HSBC, RBS, Santander and the National Australia Group, which owns the Clydesdale and Yorkshire Banks, have all confirmed with the financial regulator that they will be adopting the new process.
Under the existing system, payments such as Direct Debits are processed by banks in the morning. This leaves the customer at risk of incurring an unpaid item fee if they make a subsequent deposit or payment into their account after the bank has carried out their process. Such fees are believed to cost customers around £200 million a year.
The new system will mean that banks are able to re-try payments later in the day if deposits are not present at the time of a debit is being made, allowing deposits to clear and the outgoing payment to take place.
Lloyds Banking Group currently operates a same day retry system on many of its customers' transactions and stated that it will be updating systems so it can be used for all transactions.
Clive Adamson, the FCA's director of supervision, said: "It is little things like this that have a big impact on customers' everyday banking experience, even though many people won't be familiar with the process. This is a small adjustment, but one that will make a big difference.
"We are committed to putting customer interests at the heart of everything the FCA does, and it's encouraging that the banks are also beginning to take this approach. There are no new rules here, this is an agreement with the industry; working together for the benefit of consumers can often be more effective than writing new rules, and it certainly delivers results more quickly.
"This is part of a wider focus by the FCA to ensure consumers get a better deal from everyday banking," concluded.
Find out how to choose the best bank account by reading our guides to help you open and manage your bank account What is a Direct Debit? What is a standing order?
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