Many small business owners are reluctant to move banking providers, even if they can get a better deal elsewhere. The perceived ‘hassle’ associated with a switch is the main reason. However, since 2013, the major banks have all guaranteed to complete a business bank account switch within 7 days.
Do you need to change banking provider?
As we discovered recently, most business owners are faced with a wide range of charges when any initial ‘free’ banking period expires – typically after 18 to 24 months. You may well find a different bank which offers the same services as your current bank, but for a far lower monthly cost.
You may be dissatisfied with your bank for a number of other reasons – poor customer service, and a lack of a dedicated account manager are frequently cited grievances by account holders.
So, why do so few individuals and businesses change banking providers?
The common perception amongst business owners is that your bank will a) make it difficult for you to switch, b) the transfer will take at least 30 days, and c) so much could go wrong. For example, what will happen to your existing standing orders and direct debits?
New measures to make switching easier
During September 2013, all the major banks adopted new measures to make it easier for individuals and businesses to change providers.
- One of the main changes the banks adopted was the time it takes to complete the transfer process. It could take a month before the new guidelines were adopted. Now, the whole process should take less than a week.
- Customers can now choose the date when the transfer takes place, rather than leaving this to the whims of the bank.
- For 13 months following the switch, the new bank must automatically redirect any payments which are accidentally made into the old account.
- The new bank will also make good any interest or other charges made as a result of problems encountered during the transfer process.
- You don’t need to deal with your old bank if you don’t want to. The new bank is responsible for the entire transfer.
Has the new guarantee been succcessful?
According to the latest data – released in October 2014, during the year following the new guarantee’s launch, 1.2 million current accounts were switched, a 22% increase on the previous year’s figures.
Santander and Halifax have been the main beneficiaries over the past year, whereas Barclays, Natwest and Clydesdale have been the main losers.
So how do you switch business bank accounts?
- Once you have decided to change banks, you should approach the new bank to let them know you want to open a new business account.
- You will need to apply for a new business bank account in the normal way, providing the normal identity checks.
- You will need to complete a bank account closure instruction form, and a current account switch agreement form.
- You can choose a convenient day when the switch will take place – which should be at least 7 days after your new account is live.
- Your old account will still be active until the switch date.
- Your new banking provider is responsible for ensuring that the transfer takes place smoothly.
Where can I find out more information?
You can find out more about the Current Account Switch Guarantee via the Payments Council. 34 banks provide the switch service, which covers virtually the entire banking marketplace.
The Payment Council has also created SimplerWorld.co.uk, which answers all the most commonly-asked questions about current account switching.