600,000 switch account after change

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%VIRTUAL-SkimlinksPromo%More than 600,000 current account customers have switched providers in the six months since a new guarantee to take the "fear factor" out of changing banks was launched.

The Payments Council, which is overseeing the new service, said there were 609,300 switches in the six months to the end of March, which represents a 14% increase on the same period a year earlier.
High awareness of and growing confidence in the current account switch service has helped to boost the numbers, the Payments Council said.

More than two-thirds of people (67%) in the UK are now aware of the initiative, which is up from 59% at the end of 2013. Customer confidence has risen from 58% to 65% over the same time period.

Under the switching guarantee, the new bank or building society the customer is going to arranges for all existing incoming and outgoing payments to be transferred and their old account is automatically closed as part of this process.

The guarantee has also cut the length of time it takes to switch from up to 30 working days previously to seven.

If anything goes wrong, the customer is entitled to be refunded interest and charges under the guarantee.

The Payments Council said that a central system which enables the old and new provider to swap information has been running smoothly, as has the redirection service. More than 99% of switches
that successfully start are completing in the seven-day timescale.

The switching service is free to use for consumers, small charities, small businesses and small trusts.

The success of the scheme is being measured against customer awareness and confidence in the service and its overall performance.

The Payments Council said that switching levels on their own are not deemed to be the best measure of success.

Gary Hocking, managing director of the Payments Council, said: "By making the current account switch service quick, hassle-free and removing the fear factor we've taken away the barriers customers told us they had when it came to switching.

"Six months in and the latest figures suggest people clearly seem to be getting the message that things have changed for the better.

"There's also been a noticeable surge of advertising activity from current account providers big and small, suggesting that the new service is helping foster competition and choice for customers.

"As time goes on and the track record of the new service builds, we look forward to these encouraging results continuing."

Banks and building societies have unleashed a flood of new current account perks since the switching guarantee was introduced, in the battle to tempt in new customers and retain existing ones.

Lloyds Bank has launched a current account which pays an interest rate of 4% on balances up to £5,000, while TSB, which split with Lloyds last year, recently unveiled a new current account paying 5% interest on balances up to £2,000.

The Co-operative Bank is offering people £100 to switch their main current account to it, plus it will make a £25 donation to charity.

Marks & Spencer plans to shake up the current account market further by launching its first "free" account this summer.

Meanwhile, Tesco Bank and Virgin Money also plan to launch current accounts this year.

To help people who have decided to change their current account, the Payments Council said they should firstly work out how they use their current account and whether they normally stay in credit or overdrawn.

It said switchers should make sure the details their old bank holds are up to date to avoid any delays and have a bank statement, with their current address on it, and a debit card ready when they switch.

Which? executive director Richard Lloyd said: "Despite an increase in public awareness and confidence, switching levels are still low, suggesting that the new seven-day service is not the game-changer that can significantly increase competition in banking.

"We're pleased the Government has responded to our calls to make banks release better data about current account running costs. If done properly this should help people more easily compare banks and find the best account for them, which will inject much needed competition into the market."

10 things your bank doesn't want you to know
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600,000 switch account after change
Once you have opened a current account with a bank or other lender, you will get a steady flow of emails, letters (and maybe phone calls) offering you a savings account, loan, mortgage, ISA etc to go with it. But while it may be tempting to have everything in one place, it's better to do the legwork and shop around for the best financial products. You can compare interest rates on loans and savings accounts in the 'best buy' tables in the newspapers, or look online on comparison sites. Remember you can still easily transfer your money between accounts, even if they are not with the same financial institution. 
Whether you want to apply for a new mortgage or refinance an existing one, your bank will probably be very happy to give you an instant quote in the hope that you will go with them. They may not tell you that you can shop around at other lenders. A mortgage broker can give you an overview of the best interest rates on offer, and might be able to cut you an even better deal him/herself. 

Want to cash in your jars of change that are sitting on your shelves at home? Many banks are not very keen on coins. They often only take it from their own customers. You will have to sort it into different denominations and put the coins in the bank's bags in set amounts (for example, £1 for coppers, £5 for silver, etc). Some banks only take a limited number of bags a day, or won't take any at busy times. Others take a different view: HSBC has free coin deposit machines in many larger branches where you pour your jar of coins into the machine and it counts them and automatically credits your account. Barclays, NatWest and RBS also have machines in large branches in city centres.

Bank employees now have a duty to point out that they only advise on the bank's products and don't offer independent financial advice. What they won't tell you is that even the advice they give you about the bank's own products should be treated cautiously. Bank staff are often undertrained, underpaid and overworked. (You could ask for the employee's qualifications before getting advice.) So do your own research and/or find an independent financial adviser.

Nothing is set in stone. Your bank won't tell you this, but sometimes it will waive a fee, for example an overdraft or an ATM fee, depending on the circumstances. You have nothing to lose by asking, if you can argue persuasively why they should waive the fee. Citizens Advice says your bank should treat you sympathetically if you can show financial hardship.

As stated in the previous slide, some things are negotiable – such as interest rates or waiving fees – if you can make a good case for it. In that instance, talking to an employee in person is better than filling in a form online.

If your account is overdrawn and you get paid, your bank could use this money to pay off your overdraft without your permission. However, you have a right to ask them not to do this so you can pay your rent or mortgage first. This is called first right of appropriation. You have to ask your bank in writing, and you'll need to write to them with new instructions every time money gets paid into your account. Make sure you write 'first right of appropriation' in your letter.

If money is mistakenly credited to your account, your bank or building society can recover the money, assuming they do this within a reasonable time. But you may be allowed to keep the money, for example if you didn't realise the bank had made a mistake and spent the money in good faith. You would have to prove that you spent it in such a way that it would be unfair to ask you to pay it back. You can complain to the Financial Ombudsman if you think your lender is being unfair in asking you to repay the money.

If you do have to pay it back, you could try to reach an agreement with your bank to pay it back in instalments without interest being added.

The Financial Ombudsman Service has more advice on what happens when payments have been credited to the wrong account. If you did something wrong - for example, by entering the wrong account number - rather than the bank, the Financial Ombudsman may still uphold your complaint. They consider whether the financial institution made it clear to the consumer that only the bank sort code and account number are used to process the payment, rather than the name of the payee. They will also ask whether the lender should have realised that the consumer had made mistake, and once the problem came to light, did the firm take reasonable steps to try to get the money back from the recipient.

If too much is deducted from your account, your lender may have to refund the full amount of the payment. For example, if the money is taken through a direct debit or credit card payment for a hotel room or car rental. When deciding whether the debit was reasonable, the bank or building society will take into account your previous spending pattern. But the bank doesn't have to refund the payment if you agreed the amount beforehand or were informed of the payment by your lender at least four weeks before.

If you don't have enough money in your account to cover a direct debit payment, your bank may not make the payment. It doesn't have to tell you that the payment hasn't been made, so the onus is on you to keep checking your account. If, on the other hand, the payment goes through, you may be charged for an unauthorised overdraft.


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