The Banks are now offering high incentives to customers to switch their current accounts, (and all associated Direct Debits). This follows the announcement by the Payments Council that they are committed to delivering a new Account Switching service by September 2013. This new service will make it possible for businesses and consumers to switch current accounts within seven days or less and will be backed by a guarantee. When an account is switched, the new account provider will arrange for all incoming and outgoing payment instructions, including Direct Debits to be redirected from the old account to the new one.
Among the banks offering high incentives to customers to switch are the Co-Operative Bank, First Direct, Halifax and Santander.
The Co-Operative Bank and First Direct are offering £100 cash back as an incentive for customers to use their Account Switching service. Halifax is offering a slight variation – they are willing to pay £5 a month (£60 a year), for opening a Halifax Reward Current Account via their Account Switching Service, whilst Santander is offering a range of cashback rewards on domestic bills – 1% on water and Council Tax bills; 2% on gas and electricity bills; and 3% on communications bills. Conditions obviously apply, e.g. customers must be 18+ and able to pay in a minimum amount each month (amount varies according to the Bank). The conditions also stipulate that consumers must set-up / transfer at least 2 Direct Debits, with Santander stipulating that cashback on household bills is only payable if the bills are paid by Direct Debit.
Competition among the banks is set to become even fiercer. With incentives like this on offer, as well as assurances and garuntees from the Payment Council, it is likely that current account switching will increase. This has been welcomed by many consumers who, in market research conducted by the Payments Council, highlighted the garuntee as being crucial in generating their trust. In the same research however, concerns were expressed by some businesses and charities who felt that payments could be lost when the old account closed automatically after a 13 month period. In addition, business and charities will need to keep their systems and databases up to date with the changes in customer bank accounts. This could potentially lead to increased administration with some organisations fearing the increased potential for errors to occur.
Do you have questions about Current Account Switching? Contact us to discuss