Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
Mar 24, 2015
So then it was the turn of the humble bank account. That long-standing staple of the UK consumer and something us fellow loan calculators have long debated through various twists and turns of fees, charges and service quality. The FCA delivered its report in March about how it was going to make switching easier and as usual my loan calculator friends we have done the dirt digging so you can keep them finger nails clean and clipped.
The current account switch service was introduced in September of 2013 and was a wholly voluntary scheme. It was designed to alleviate the issues consumers had with switching bank accounts and increase competition. The FCA in all their wisdom did point out the following flaws in the current process with which we at simple finance can certainly relate to.
Simple finance fact 1. The 12 month payment redirection service was missing at least one direct debit payment in around 8% of cases. This is to be extended now to 36 months.
Simple finance fact 2. Awareness in the scheme seemed to run anywhere between 16% and 69% depending on the report you referenced, much lower than the 75% target for the service set by the treasury.
Simple finance fact 3. Confidence in the scheme seemed also to be below ideal. Concerns from consumers over changing accounts, old accounts closed, new pin numbers and account numbers also appeared to be barriers.
Simple finance fact 4. The FCA did poll consumers on shortening the switching period from 7 to 5 days but found this made no real difference to consumers and certainly was not something they raised as a priority during discussions and polls.
Simple finance fact 5. The FCA also looked into if a workable system could be found for allowing account numbers to be switched between banks as this would have alleviated one of the main concerns customers had it seemed reasonable to explore this further. Immediate barriers to such a radical proposal were encountered from international transfers where the international bank account number (IBAN) is used. Also measures would need to be put in place to prevent banks reissuing older account numbers and the report correctly identified a lot more thought would need to be out into this before this objective could be realized.
So it would appear that for now the recommendation on banking switching services is to be minor for now. The biggest barrier it would appear is not the
Until next time my loan calculator chums,
Take care from all at simple finance.
http://www.fca.org.uk/your-fca/documents/research/cass-report