Current Account Switch Service gets an overhaul
BACS have committed to reforming the Current Account Switch Service (CASS), which enables bank customers to automatically switch current accounts in seven working days.
Bacs' commitment comes in response to recommendations made by the Competition and Markets Authority (CMA), who as part of their 2016 review into the current account market advised that CASS should be reformed.
In particular, Bacs will be extending the service's redirection period, changing its governance structure, improving the overdraft information it provides, and raising its public profile.
It's hoped that these measures will strengthen CASS and make it more helpful to the public, yet it still remains an open question as to whether this public - and the banks - will be motivated enough to make full use of it.
Scepticism surrounding this question is understandable insofar as only 3% of current account holders switched accounts between 2015-16.
In previous years the proportion has been higher, but it seems as if steam has run out of the campaign to encourage more people to switch.
This is why, when the CMA delivered their final report [PDF] on banking in August, they recommended "building on and improving the existing CASS", so as to "make current account switching work better".
Their biggest worry was that "customers fear that switching current accounts is burdensome and time-consuming", a concern that is reflected in the package of reforms to which Bacs have now committed to deliver over the next 12 months.
First of all, Bacs want to change CASS' redirection period, which is the period during which the service will redirect any payments from your old current account to your new one.
At the moment, this period is a minimum of 36 months, yet soon it will continue until it is "no longer needed". More specifically, it will stop once a customer has gone 13 months since the last redirected payment.
Added to this, the governance structure of the CASS Management Committee will be changed, so as to allow greater representation for "consumer groups, small businesses and comparison websites".
While it's not detailed how exactly such groups will be given greater representation, this is an encouraging move, at least in the sense that CASS will become more responsive to the experiences and needs of customers as a result.
Part of this responsiveness will be expressed in the ramped-up publicity campaigns Bacs have also committed to undertaking. In order to raise awareness levels, for example, they'll be broadcasting a new run of adverts on TV and in cinemas in the near future.
More importantly, they'll also be actively targeting particular kinds of customers who'd be more likely to benefit from switching. These include "SMEs, overdraft users, the young and those with high credit balances", precisely the kinds of groups who lose as much as £260 a year on average as a result of not switching.
Together, such measures will strengthen the service, complementing the features it already possesses, as listed below:
|The service is free to use||The switch will be completed in seven working days|
|The customer can choose the switch date with their new provider.||All payments going out (e.g. Direct Debits) and those coming in (e.g. salary) will be moved from the old account to the new account|
|Payments accidentally made to or requested from the old account will be automatically redirected to the new account.||The Current Account Switch Guarantee means that the customer will receive a refund of interest and charges if anything goes wrong with the switch.|
Speaking of the improvements to these features, Anne Pieckielon, Bacs' Director of Product and Strategy, said, "We are pleased to formally commit to the CMA's undertakings and look forward to continuing to work closely with them ... as we deliver further improvements in the current account switching space".
However, it's not entirely certain as to whether simply reinforcing the switching service - which mainly handles the practicalities of switching - is enough to ensure that more people will switch.
As we've noted before, what's also needed is clearer information on current accounts, so that customers can meaningfully compare them and see for themselves that switching could be worthwhile.
And while the CMA resolved to require banks to "provide information on service quality" in their report, this requirement hasn't yet been implemented. Because of this, no amount of ease and simplicity in the switching service will have a significant impact on switching figures at the moment, at least not until banks are required to present their accounts in a uniform, comparable way.
That their terms are often too complicated is seen in how, instead of offering a genuinely competitive current account, certain banks simply offer cash incentives of £100 or £200 to customers who sign up with them.
Such incentives may make for a nice one-off gift, yet it sometimes seems as though their main aim is to get in the way of people considering the terms and conditions that lie behind them, or of realising that such terms and conditions can't be compared in any straightforward way.
And in the end, there's a strong possibility that, until the CMA requires banks to be more straightforward in presenting information, no amount of fine-tuning from CASS will make many more people switch, as helpful as it may be.
That said, if you've switched using the Current Account Switch Service, we'd love to hear about your experiences. In particular, what motivated you to switch? Was it the ease of the service, or was it simply the desire to have a better current account? Leave your comments below.