MSE News: Osborne commits to speedier bank account switching

pqrdef

rb10 wrote: »

Their research shows that whilst slowly increasing numbers of people are switching banks, there still remains a majority who are too fearful to switch.

At least the present half-baked switching system allows one to keep the old account open. With the new system, the old account will be rendered almost unusable, so it'll get closed.

But the switching system knows nothing of debit cards and CPAs, so closed accounts will get reopened months later to make forgotten but guaranteed payments, creating unauthorised overdrafts.

But the would-be-ex-customer won't have notified a change of address for a "closed" account, so he'll know nothing of this until he finds a default on his credit report.

Alpine_Star

innovate wrote: »

I don't know what the PCA study is you refer to, or by whom it is not perceived to be easy and straight forward.

What I do know is that both myself and a host of other people have moved all or part of their current accounts between banks with no problems for years.

Ok, I'll spoon-feed you:

http://lmgtfy.com/?q=PCA+market+study

''Furthermore, a significant proportion of consumers believe that it is complex and risky to switch accounts, with the result that switching rates are very low.''

''The qualitative research highlighted the fact that consumers are fearful of regular payments being missed if they have moved account - a fear that is not wholly misplaced given that this was the most common problem experienced by those that have switched''

Now, this is complete stab in the dark, but it could be that the research that this data and conclusion was based on was sourced from a slightly larger consumer sample than you and your pals. But that's just a guess mind.

innovate

Alpine_Star wrote: »

Ok, I'll spoon-feed you:

errrm...no, you don't.

ses6jwg

TBH a lot of personal experiences of switching will also depend on:

1) The bank you are switching to/ from
2) The companies you are paying direct debits to
3) The channel which you have chosen to implement the switch through

On point 1, certain banks seem to have a more effective switching process than others.

On point 2, I've noticed that despite it being completely against the banking code, certain companies completely ignore requests from banks to change details on behalf of customers and absolutely insist that the customer calls them in person. Sometimes they simply do not bother to update the details and ignore the letters sent to them.

On point 3, if somebody instigates a switch online, there is far more chance of there being problems because they might not understand that the need to keep money in both accounts, not know where to go when things go wrong etc etc.
As I said previously, having done over 100 switches I can only think of 3 occassions where something has gone wrong, and the customer simply came in to see me and within 15 minutes it was sorted. We've had customers come in who have tried to switch online and they've cocked it right up... they've gone and closed the old account before the direct debits have come across, bank charges everywhere, salaries lost etc.

innovate

ses6jwg wrote: »

On point 2, I've noticed that despite it being completely against the banking code, certain companies completely ignore requests from banks to change details on behalf of customers and absolutely insist that the customer calls them in person. Sometimes they simply do not bother to update the details and ignore the letters sent to them.

Tallies with my experience. Though why you would expect non-banking organisations to comply with the banking code (or its successor, the Banking Conduct Scheme) is a bit of a mystery to me. Many of the relevant companies don't need FSA authorisation, so the last thing they will do is comply with rule books the FSA issued.

ses6jwg wrote: »

On point 3......

It doesn't surprise me that you found it's all quite straight-forward, and that if things go wrong, it's usually down to the customer mucking about and, frankly, not understanding what they are doing. Blaming the banks in such cases is just ridiculous. Consumers need to assume a bit more responsibility for their actions and stop accusing someone else for their own mistakes.

DaveO

innovate wrote: »

I have no doubt that the DD system can be fudged in a way DaveO describes. However, none of this alters the fact that the DD mandate is with the the recipient, not with the banks. Unless the recipient is another bank (tiny number of DDs only), the banks have absolutely zero powers to tell the recipient to change the mandate. So they may have to redirect DD payments for a very long time if not forever - - unless the customer acts and tells the recipient to change the mandate.

Well even in the current system getting the recipient to change the mandate is a requirement when you switch bank accounts. That little bit of logistics won't go away. DD's are just a request to move money from one bank account to another so the technical aspect of doing that is straightforward.

The length if time a redirection is in place is going to be (as I understand it) 13 months. That is for payments not DD's but I assume it will be a similar length of time for those as well.

What happens when the time is up? No more redirections will occur but I really don't see that as a problem because given the long grace period that should be long enough to sort things out.

What also happens is the redirected payments hold information about the original account and bank and given the new bank can see a payment is a redirected one they can deal with the implications. Any bank ignoring payments being persistently redirected won't be doing a very good job!

The "actually technically very simple" fudge seems to also force people to, effectively, close their old account. It is entirely unsuitable for people who would like to have more than one account, with some DDs on one account and some on the other. Mind you, people wanting to do that have been quite happily doing this for a long time without the fudge.

That does not follow at all. All the technical side of this does is intercept the payment/DD and redirect it if required. If you have switched one of your several accounts only payments/DD's directed at that account will be being redirected to the new account.

We shall see how it pans out. The whole thing is a huge, but expensive, storm in a teacup anyway, because those who want to move (fully or partially) have longe been able to do so without any issues, and with very little effort.

The big reason they are doing this is not DD's but payments because as you say it isn't currently a huge effort to get those moved. Given the ever increasing use of faster payments there is an increasing likelihood out of date information could be used to send money about. As an example we go away with friends and one family will make the booking. I will pay my dues by sending them an electronic payment and I have their details set up with my bank. If they forget to tell me their new account or I forget to update things at my end then with the new system they will still get their money just as fast as previously!

Consumerist

innovate wrote: »

The DD system is perfectly fit for purpose, incl the Direct Debit Guarantee that fully protects the customer's rights. . .

What you mean is that it suits your purpose and you don't give a hoot that others are having problems with it. If you aren't having any problems then are no problems as far as you're concerned.

innovate

Any DD problems that I have seen reported on various internet forums fall into two categories

1. the customer didn't know/remember that they had given a DD authority
2. the customer had a severe lack of basic understanding of what a DD is (mixed it up with SOs, didn't have the money in their account when the DD was due etc)

Neither of these two issues will be addressed by banks switching accounts faster. It is, in the main, an educational issue.


What other issues are there with the current DD system?

pqrdef

innovate wrote: »

It is, in the main, an educational issue.

Customers are what they are, and a customer service organisation (a concept that's never caught on with the banks) has to take them as they come. It's their job to have systems and services that their customers - all of them - can understand and use.

No use blaming the payees either. When major organisations like TVLA and water companies can't get it right, the banks and BACS should be talking to them to find out why not. But they're too arrogant.

BACS's concept of a switching service depends on a switching date, when everything is supposed to switch over. Did anybody ask the payees whether their systems could implement future-dated changes? Most of them can't.

Consumerist

innovate wrote: »

What other issues are there with the current DD system?

The main issue, as I understand it, is that during the switching process it is currently necessary to fund two account at the same time because of uncertainty as to which account will be called on to pay a DD.

For those of us with the funds to do it, that is not an issue but many people these days are having trouble making ends meet and cannot afford to fund two accounts at the same time. By forwarding DDs called on an old account to a new account, it will only be necessary to fund the new account during the switching period.

I must say that I don't really understand your objection. What will you lose if/when the changes are introduced?