From the 16th September this year all UK current account customers have been able to switch current accounts between banks in seven days. The seven day switching scheme was introduced by the Payments Council and guarantees that consumers can switch between accounts in seven days in a bid to encourage more competition between a sector that is dominated by just four big banks.
There is still a lot of uncertainty around the scheme though so we thought we’d clear up some of the confusion by tackling some common questions.
How does it work?
It’s really very simple. All you do is inform your bank you are changing bank accounts and they will be obliged to move your funds to your bank of choice along within seven working days. For 13 months your new current account provider will make sure any payments made to your old account are redirected to your new account, as well as informing the payee of your new bank account details.
How long does it actually take?
Seven day switching is actually misleading as it can take up to seven working days meaning that it could actually take anything up to nine days to switch.
Which banks are on board?
All the major UK current account providers are now duty-bound by the guarantee. Virtually all current accounts you are likely to find in the market are covered by the scheme but for a full and comprehensive list please visit the Payments Council’s full listing here.
Are my Direct Debits changed for me?
Yes, all your direct debits and standing orders will automatically be transferred to your new bank account by your new provider and any payments made accidentally to your old account will be redirected to your new account for a period of up to 13 months to cover all regular payments over the course of the year.
Do I have to give my employer about my new bank details?
No, your new current account provider will inform your employer of your new bank account details so your salary will transfer over to your new account without you having to lift a finger.
What isn’t guaranteed?
Important to note are the things that aren’t guaranteed under the seven day switching scheme. Firstly your PIN isn’t guaranteed under the scheme so even though your account is open on the seventh working day you may not be able to withdraw cash from it immediately. Continuous payment authorities aren’t guaranteed either. These are regular payments set up using your debit card details instead of your bank account and sort code and are often the preferred method of telecoms and utility companies as well as some other organisations like gyms.
Can I switch between savings accounts?
No, the scheme only covers current accounts as well as less talked about basic bank accounts. All ISAs, fixed rate, regular and instant access savings accounts are excluded from the scheme. Mortgages are also excluded.
What will happen to my old bank account after I’ve switched?
Your old bank account will automatically close on the day of your switch which will be agreed with your new provider at the start of the process. Anyone wishing to keep their old account open cannot be guaranteed under the seven day switching guarantee.
Author Bio: Joe Cox is a content writer for GE Capital Direct, a UK provider of ISAs and savings accounts. He has written extensively on banking and finance.