The report also proposed that customers should be able to move accounts without having to change their account number, simplifying the current system whereby all bills and payments have to be re-directed to a new account number.
The commission’s interim report is now being consulted on and a final report is due to be issued this autumn. Only once that is out will the government then decide how many of the proposals to adopt and some changes may take years to come into effect.
In the meantime, if you’re not happy with your current account, you should move as soon as possible, but make sure you know what to expect when you switch. Here, we explain how the current switching process works and how to ensure your move goes painlessly…
Can I switch banks if I’m always overdrawn?
Yes, you can move banks even if you have an overdraft – provided you can show you have used it sensibly. Banks are unlikely to want to take on someone who has regularly gone overdrawn without agreeing it in advance, but provided you’ve always stayed within your authorised limit there shouldn’t be any reason for them to turn you down.
What information will I need to give the bank I’m switching to?
You will need to provide separate proofs of identity and your address to switch banks. That means either a passport or driving licence to show your identity, and a utility bill or statement from your current bank to show your address. You will also need to sign a transfer form saying you agree for your new provider to contact your existing bank to get details of the regular payments that are made into and from your account, and fill in an application form for your new account.
Most banks offer dedicated switching services, so they do all the hard work for you and move your direct debits and standing orders to your new account on your behalf. They will also often send you letters to give to your employer, pension provider, or any other organisations that make regular payments into your account, notifying them that you are moving to a new bank, or they will let them know direct.
Some banks will also close your old current account for you, but check that they do this, as if they don’t, you will need to arrange this yourself.
How long will moving accounts take?
The entire switching process can take around a month, although it often only takes 10 working days to move from one bank to another.
Actually transferring your funds to your new bank shouldn’t take very long at all. Banks use the Bankers Automated Clearing Services (BACS) system to move your money across and this means funds can be moved on the same day you ask your bank to transfer them. Your old bank must pass information on direct debits and standing orders to your new bank within three working days.
Bear in mind, however, that often direct debits go out at different times throughout the month and some of these may leave your account before your salary goes in.
Most banks will either set up a free overdraft facility so that payments can be made even if your salary hasn’t gone into the account yet, or they will promise not to impose any penalty charges.
Which current account should I choose?
That will depend entirely on how you use your current account. If you tend to spend most of your time in the red, then you will need a current account with low overdraft charges, such as Santander’s Preferred Current Account. This account is also worth a look if you tend to stay in the black, as it pays 5.00% interest on balances of up to £2,500 for the first year provided you pay in at least £1,000 a month.
And remember - better interest rates and lower overdraft fees aren’t the only reason to switch current account - you are often rewarded with incentives for moving.
The Santander Preferred Current Account, for example, gives £100 cashback to new customers who switch online, while Norwich & Peterborough Building Society’s Gold Classic account offers a £150 holiday voucher – valid with any ATOL/ABTA tour operator – to those who take out the account through moneysupermarket.com. You also get £100 cashback if you switch to First Direct’s current account.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.