Are there valid technical reasons preventing retaining account numbers in switch?

Ballard

The way that I believe the switching service works is that when your old bank receives a debit or credit for your new account it sends a message back to the originator to advise of the new details for them to update their records. I think (but am not completely sure) that it then either forwards the credit or requests a debit from the new bank.

Direct debit mandates and standing orders are transferred electronically during the switching process.

Three years is ample time for everyone that you deal with to have paid or claimed from you and therefore have had their records updated. If you have someone who pays you less frequently than 36 months then it seems reasonable to expect you to advise them directly.

I personally see no benefit to anyone in extending beyond three years.

eskbanker

hoc wrote: »

So really the easiest solution would be to extend the current post-switch redirect beyond 3 years.

Ballard wrote: »

I personally see no benefit to anyone in extending beyond three years.

My understanding is that the redirection period was extended in 2017 so that instead of 36 months, it's effectively indefinite after that until a 13-month period passes without any redirections.

This was trailed at https://www.moneysavingexpert.com/news/2017/01/redirection-period-for-payments-to-old-bank-accounts-to-be-extended-/ as a result of BACS committing to the CMA that it would implement recommendations from an earlier report, as per https://assets.publishing.service.gov.uk/media/587ded7eed915d0aeb00015d/retail-banking-investigation-final-bacs-undertakings.pdf:

4.1 Bacs shall maintain the current 36-month CASS redirection period, which redirects payments and payment requests to the current PCA or BCA for customers who have switched PCA or BCA and receive a payment or payment request into an old account, and then continue to provide CASS redirection for customers as long as they have had a redirection payment or payment request within the preceding 13 months.

However, I can't find any reference within the main BACS or CASS sites to this definitely having been implemented as planned for July 2017, does anyone have a definitive verifiable source that this is now how it works? Nationwide's switch terms do specify this extended redirection (until a blank 13 month period) for example, in clause 1.14, and I find it hard to believe that they'd be acting alone....

abz88

Ben8282 wrote: »

Agree about the sort codes. As for the account numbers, the existing account number may not correspond to the new bank's number range for accounts or may already be used by another customer etc

It would also play havoc with building societies that use roll numbers along with account numbers.

abz88

Ballard wrote: »

The way that I believe the switching service works is that when your old bank receives a debit or credit for your new account it sends a message back to the originator to advise of the new details for them to update their records. I think (but am not completely sure) that it then either forwards the credit or requests a debit from the new bank.

Direct debit mandates and standing orders are transferred electronically during the switching process.

Three years is ample time for everyone that you deal with to have paid or claimed from you and therefore have had their records updated. If you have someone who pays you less frequently than 36 months then it seems reasonable to expect you to advise them directly.

I personally see no benefit to anyone in extending beyond three years.

Most banks us the switching service, but I don't think they all do? (I don't know what one's don't, but the current account switching service is always advertised as something "most" banks subscribe to but not all.
So the idea of a single account number would't work with those banks that don't use the switching service either.

Ballard

abz88 wrote: »

Most banks us the switching service, but I don't think they all do? (I don't know what one's don't, but the current account switching service is always advertised as something "most" banks subscribe to but not all.
So the idea of a single account number would't work with those banks that don't use the switching service either.

I think that in general agency banks don’t use the CASS service. Possibly larger ones too as only last week I was on the phone to FD switching a BoS account and the operator checked that BoS were CASS compliant.

hoc

eskbanker wrote: »

My understanding is that the redirection period was extended in 2017 so that instead of 36 months, it's effectively indefinite after that until a 13-month period passes without any redirections.

This was trailed at https://www.moneysavingexpert.com/news/2017/01/redirection-period-for-payments-to-old-bank-accounts-to-be-extended-/ as a result of BACS committing to the CMA that it would implement recommendations from an earlier report, as per https://assets.publishing.service.gov.uk/media/587ded7eed915d0aeb00015d/retail-banking-investigation-final-bacs-undertakings.pdf:

However, I can't find any reference within the main BACS or CASS sites to this definitely having been implemented as planned for July 2017, does anyone have a definitive verifiable source that this is now how it works? Nationwide's switch terms do specify this extended redirection (until a blank 13 month period) for example, in clause 1.14, and I find it hard to believe that they'd be acting alone....

Lloyds switching guide http://www.lloydsbank.com/assets/media/pdfs/current-accounts/current-accounts-switching-brochure.pdf has a similar clause:



14. In the unlikely event that payments continue to be redirected to my New Account during the 13 months leading up to the end of the 3 year redirection period, the redirection service and the term of this Agreement will automatically be extended until such time as there is a 13 month period when no Direct Debits, Bacs Direct Credits or Faster Payment transactions have been automatically redirected by the central redirection service. Consequently, payments made with intervals of more than 13 months will be disregarded.


This suggests old account details can continue to be used to receive payment indefinitely.



Lloyds mentions "central redirection service", isn't the redirect managed individually by the receiving bank and not by a central service today unlike the ANP report options?



Presuming the redirect is managed currently by the receiving bank if the receiving bank goes bust the system would fail although this would also be a problem within the initial 3 years so maybe there is some other mechanism that kicks in this case. Has such a case happened, a bank going bust (not a take over by another bank) since the switch system? What happens?


Other issue is this "message" the sender apparently receives. What is this and how does it work? Is it to the sending bank as general information or to the actual sender. It's unclear what this is and whether it is bank specific or any different within and beyond the initial 3 years.

JuicyJesus

hoc wrote: »

This suggests old account details can continue to be used to receive payment indefinitely.

Effectively, yes. But only if you receive at least one payment through those details in 36 months.

Other issue is this "message" the sender apparently receives. What is this and how does it work? Is it to the sending bank as general information or to the actual sender. It's unclear what this is and whether it is bank specific or any different within and beyond the initial 3 years.

In a past life when I did payments as part of my job, the details got sent to the sending bank as an interbank message (MT199) advising us to update our details. I'll presume the mechanism is similar and the sending bank will update the payee on their systems at their end.

eskbanker

hoc wrote: »

Lloyds mentions "central redirection service", isn't the redirect managed individually by the receiving bank and not by a central service today unlike the ANP report options?

Presuming the redirect is managed currently by the receiving bank if the receiving bank goes bust the system would fail although this would also be a problem within the initial 3 years so maybe there is some other mechanism that kicks in this case.

Seems odd to effectively assume that Lloyds are lying about the existence of the central redirection service but it is part of the architecture developed by BACS to enable CASS - they refer to it within the description of another service:

...the proven central redirection facility, developed for the flagship Current Account Switch Service (CASS), which has already handled almost 4 million account switches across the UK.

Incidentally, it does now appear that BACS explicitly refer to indefinite redirection, at https://www.bacs.co.uk/services/accountswitchingservice/pages/accountswitchingservice.aspx:

Any payments that continue to be made to, or collected from the old account will be automatically redirected to the customer’s new account. Redirection will be indefinite for those customers who continue to require it.

and this page also states:

Transactions will be redirected to ensure all payments attempting to be collected from or being made to an old account will redirect to the new account for 3 years after the Switch Date, or longer in accordance with clause 1.14 of the Customer Agreement

i.e. that clause used by Nationwide and Lloyds is a standard one applicable across all CASS participants.

Ballard

Other issue is this "message" the sender apparently receives. What is this and how does it work? Is it to the sending bank as general information or to the actual sender. It's unclear what this is and whether it is bank specific or any different within and beyond the initial 3 years.

Banks have a system, separate to Swift, for communication about direct debits which allows your bank to bounce them for a variety of reasons. Within this there’s the ability to say that the account has moved and supply the new details. These details will be passed back to the originators bank and they are tasked with updating their records accordingly and claiming the funds using the new details.

Similarly there’s an option for the bank to go through all of the outstanding direct debits for a customer and advise each originating bank of new account details and this will form part of the switching process.

I have a feeling that credits can be returned in the same way but I never had cause to do so. I know that I have in the past sent funds to one of my accounts that I had switched and within seconds the account details in my sending bank have been updated with the new number so there’s definitely no human intervention involved.

hoc

So does the redirect service being managed centrally by BACS confirm the system would continue to work even in the case of the old bank going bust?


Would the message mechanism result in only direct debits being updated to the new account details or also standing orders? So anything other than a manual payment would be automatically updated?