Seven-day current account switch service celebrates fifth birthday

The seven-day current account switch service is celebrating its fifth birthday – with over five million people, small businesses, and charities having moved providers since the scheme launched in September 2013.

The service, which helps current account customers to “vote with their feet”, aims to take the hassle out of ditching and switching current accounts.

It covers 99% of the UK’s current account market, with 47 banks and building societies taking part.

Before the service was launched, it could take up to 30 days to move current accounts – but now switches take place in seven working days.

Payments going out such as direct debits and those coming in such as salaries are automatically moved from the old account to the new account.

Payments accidentally made to or requested from the old account are automatically redirected to the new account.

The service has redirected tens of millions of payments mistakenly applied to old bank accounts.

The current account switch guarantee also means that the customer will receive a refund of interest and charges on their old and new current accounts if anything goes wrong with the switch.

In April 2015 the rules for who could use the service were extended to cover more small businesses.

Payments body Bacs, a subsidiary of the New Payment System Operator (NPSO), is responsible for the service.

Paul Horlock, chief executive of NPSO, said: “It has never been easier for bank customers to vote with their feet.”

Despite the launch of the service, there have been concerns that many people who may be better off switching are still staying put with their provider – with there being around 70 million active personal current accounts in the UK.

Previous research by the Competition and Markets Authority in 2016 found someone could save £92 a year on average by switching to a deal that better suits their needs.

Sarah Coles, a personal finance analyst at Hargreaves Lansdown, suggested some people may be attached to their bank due to “entrenched misconceptions”.

She continued: “So before we’re ready to embrace the advantages of switching, we need to overcome them.”

She said people may be attached to their existing provider due to believing all banks are the same or because they may be unfamiliar with challenger banks.

In reality, some banks regularly win awards for their customer service and have useful money apps and all banks must be vetted in order to operate savings or current accounts in the UK, she said.

When banks go bust, customers also have the protection of the Financial Services Compensation Scheme, which pays up to £85,000 per person per firm.