Clare Francis: I’ve done it, but have you? I’m talking about switching your current accounts.
Around 75% of people have banked with the same bank since they opened their first current account, and we are more likely to get a divorce then we are to change our bank account.
We did a bit of a straw poll around moneysupermarket.com’s offices, just to gauge opinion and see what’s putting people off.
“I just thought there would be tonnes and tonnes of paperwork, so I have just never been bothered to do it to be honest with you.”
“It worries me that my direct debits might not go out on time and the new account might not be set up quickly enough so I might end up overdrawn.”
“I just can’t be bothered with the hassle to honest with you.”
“No, never have – it’s just too much hassle really.”
“I suppose if it was an easy process then I would be quite tempted to do it, but at the moment it really doesn’t attract me at all.”
“Despite online banking I am still really interested in the fact that there is a local branch in my area.”
“Well, I wouldn’t want to have all the hassle of doing any leg work and getting in touch with all the direct debit companies, standing orders and things like that.”
“I just think it’s going to be more hassle then it worth.”
“I just seem to be to much hassle really, too much hard work.”
“I have never switched my account because I have never felt any need to or any benefit to do so.”
“That’s put me off switching for a number of years actually.”
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CF: I’m here at HSBC’s head office to speak to Barnaby Jenkins, who’s head of banking, to ask him exactly how the switching process works.
Q1: So, Barnaby a lot of people are put off switching their current account because they think it’s too much hassle. So, can you just talk us through the process? What do I as a customer have to do, and what will you as the bank do?
Barnaby Jenkins: Yes, well, it’s quite simple really. Most banks provide three forms that help the customer though the switching process.
The first one is a ‘switching your account’ form, which the customer simply signs, provides details of their old bank and gives it back to the new bank. Through signing it, it gives the new bank the authorisation to proceed with the switching process.
So the new bank contact the old bank, get all the details of your existing standing orders and direct debits and send it to you in a list, just so you can check them off – they will send you the transfer date as well – and then you will know exactly when all your payments will be transferred
Q2: And roughly how long does it take?
BJ: It differs from bank to bank; some do between two to three weeks. At HSBC we always say its one calendar month from when we receive that form, which gives a long enough window to give the customer absolute certainty that their transfer of their direct debits and standing orders will take place by that date.
Q3: What happens if you’ve got a direct debit that goes out of the new account before your salaries gone in, because obviously things go out on different days of the month – is there any cover there?
BJ: Well most banks actually provide an interest and charge-free overdraft – subject to status – for the period of the switching, so at HSBC for example if you qualify for an overdraft we’d give you two months interest and charge-free, so if a direct debit did come out before you’d managed to transfer your salary or your pension or whatever your credits are, then you wouldn’t incur any fees.
Q4: Because obviously things can go wrong. What happens if a direct debit is missed or it doesn’t transfer on the date that it is meant to transfer?
BJ: Well, there are several things that you can do. The first think that I would always advise it to stay in touch with your new bank throughout the switching process. They would be very happy to hear from you and they will be very happy to let you know about any transfer date, any change to the date and any direct debits that they are struggling to track down or struggling to move across.
The key thing after the transfer date is to keep a close eye on your new bank account - compare it with the sheet of all your direct debits and standing orders that you thought would be transferred, and make sure they are all going out at the right time and if they haven’t you can either contact your new bank who will try to chase that up for you, or its often quicker just to contact the organisation directly – so that might be your gym, it might be your council tax who have failed to move it across – it can often be done quickly in a phone call to them.
Q5: Would it have an effect on your credit score if a payment was missed because the transfer hadn’t gone through or would it be overlooked because of the circumstances?
BJ: In general, with switching and if you speak directly – for example if it was the council and you missed a council tax payment because they hadn’t transferred the direct debit – in general they would overlook it and it would have no impact on your credit score.
Q6: What about people who have got overdrafts? I think that is one of the things that often puts people off moving and they think if they are overdrawn they can’t move their bank account. Would you as a new bank take on somebody with their overdraft?
BJ: There’s nothing to stop you switching if you have an overdraft on your old account and there’s nothing to stop you switching your direct debits and standing orders.
In terms of switching the overdraft from the old bank to the new bank, obviously your new bank has to make a decision about whether it will be comfortable to lend to you and that is always subject to status. So, it would be a question that you would have to discuss with your new bank as to whether they would be prepared to do that.
Q7: But I guess you could have to ask that before you go through the full application process?
BJ: Exactly. You could always ask them and they can hopefully give you a view before you go through the whole switching process.
Q8: And just generally, just to finish off. Do you think people are getting more relaxed and more willing to move their current account? So are you seeing and increase in the number of people that are switching?
BJ: We are seeing an increase here at HSBC. I think the current account market is extremely competitive at the moment so lots of great offers depending on what features the customer is attracted to – whether it is credit interest or an account that has something like travel insurance or an account for students – so there is a very competitive market at the moment which means great options for customers and also a lot more switching, and I’m hopefully trying to make it clear that it’s actually quite a simple process to switch.
Q9: Yes it’s become a lot simpler hasn’t it, over the last few years with banks actually taking the onus and doing most of the hard work?
BJ: Absolutely. Like I said, I mean there are three basic forms that most banks will use, the switching for direct debits and standing orders and a form that you use to switch our credits – so you might give it to your employer to switch your salary - but also any other company that credits your account, child benefits, might be your pension fund.
And the third thing which you do right at the end of the switching process – we have a form for it as well – is the closure of your old bank account, and an instruction for them to transfer your money to your new account.
CF: Great. Thank you Barnaby.
BJ: Thank you.
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CF: So switching your current account really shouldn’t be too much hassle as many of those who have done it – myself included – would testify.
“We changed our current account because with the new one we got a savings account attached to it, which had a much better savings rate”.
“I switched my current account in July last year, and the reason for switching was because I got a £100 incentive and a great interest rate that was valid for 12 months.”
“I switched at the start of 2008 and since then I’ve been really happy”.
“There are some cash offers out there for switching, and that’s a big incentive as well!”