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Why the 7-Day Switch has been introduced

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For years, people have tended to stick fast to the current account they’ve always had. Usually this is because they are worried about the upheaval of transferring a finely-balanced arrangement of different payments over to another bank, and there is also a concern that the process will take too long.

But from September 16, 2013, the 7-Day Switch (officially called the Current Account Switch Service) will ensure that the process is completed smoothly within seven working days.

And, under the Payments Council’s Current Account Switch Guarantee which underpins the service, consumers are also handed a whole raft of promises that banks and building societies will have to adhere to.

What does the 7-Day Switch mean for consumers?

The 7-Day Switch is designed to make it easier and less time-consuming for people to move bank accounts.

The new switching rules mean it is more important than ever to regularly compare bank accounts.

For example, while direct debits and standing orders would automatically be transferred to your new bank account even before the 7-Day Switch came into effect, consumers would have to contact anyone making payments into their account – such as their employer – themselves with their new bank account details.

But the 7-Day Switch rules mean the onus for BOTH outgoing and incoming payments is on the new bank and not the customer. In other words, your salary or any income from investments, pension or a rental property for example, will be automatically transferred to your new account as well as your outgoings. This is guaranteed for a period of 13 months starting from the agreed switch date, to make sure it incorporates all annual payments too.

What’s more, if a mistake is made under the new rules which means a payment is missed, you will be refunded for any fines or interest (lost or charged).

It is hoped that these new, improved switching conditions will encourage people to be more proactive about seeking out the best account for their needs, and – in turn – that this will increase competition between providers, resulting in better deals and customer service.

It's now more important than ever to regularly compare bank accounts and vote with your feet if you are not happy with your existing provider - but bear in mind that your old account will have to be closed for the rules to apply.

How much quicker is the 7-Day Switch?

Any current account switch from September 2013 will also be carried out in seven days. Note, however, these are working days, which could mean up to 11 days in total (not including Bank Holidays). Prior to the 7-Day Switch rules, changing banks could take anything between 18 and 30 working days, so often this meant waiting a month before your new bank account kicked in.

And, as the whole process under the new switching service is carried out on the customer’s behalf, there shouldn’t be any disruption during the seven working days either.

This will not only make it easier for individuals to find a better bank account for their needs, but small business and charities will benefit too.

Compare current accounts

The new switching rules mean it is more important than ever to regularly compare bank accounts.

Using MoneySupermarket’s current account comparison tool, you can see at a glance what the various banks and building societies offer. Find the deal that's right for you, get in touch with the new bank and arrange to switch at an agreed date (in seven working days or longer). Then, within a little over a week you could have a new and fully-functioning bank account which either pays more interest if you stay in credit, or charges less interest if you use your overdraft.

And even if it’s just a better standard of customer service you were after, that aspect of your day-to-day life will start to feel a lot less like tearing your hair out.

Laura Howard

 

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