Current account holders in the UK can now switch banks within seven days following the launch of the Current Account Switch Service.
A total of 33 banks and building societies are included in the initial roll-out with more to follow.
The regulation, introduced by the Banking Commission, is aimed at simplifying and speeding up the process of changing bank account providers for consumers, small businesses and charities. It means the time of the current process - where switching accounts can take up to 30 days - will be slashed.
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A centralised system, built by Vocalink, makes sure all payments made to the old account will be redirected to the new account. This will ensure that payments won’t be lost if old account details are used in error. The service operates on a new, custom-developed IT platform based on the ISO 20022 specification.
“This means that, for many banks, especially the main high street banks, the entire process can be automated,” said the Payments Council.
The Payments Council said there is a web-based alternative for smaller banks, which is fully integrated. “Any bank subscribing to the service can switch an account from any other member bank – and they all use the same central, shared infrastructure to do so,” it added.
Adrian Kamellard, CEO of the Payments Council, said there would be increased competition and choice as a result of the new system.
“Over the past two years multiple financial institutions have come together to design and implement this new, free and standardised service which will raise the bar internationally for retail banking," he said.
“The new service also removes the barriers to switching that used to exist by making the whole process simple and hassle-free. Switching times will also be dramatically reduced to just seven working days and crucially we have put customers in control of their own switch date.”
Earlier this year a BT-sponsored YouGov study revealed that 62% of UK bank customers would welcome an easier way to change banks. The research questioned over 6,500 people in six countries worldwide.