New format may encourage SMEs to consider the benefits of changing banks
SMEs are set to benefit from the latest round of changes to hit the banking system, as switching current accounts is set to be made easier.
The time it takes to transfer is set to be reduced from 30 days to just a week in mid-September, while customers will not face extra fees or charges.
The Payments Council is behind the new service, aimed at ensuring that the transfer of business accounts is both quick and stress-free.
“We are going to make it simpler, quicker and hassle-free for consumers, SMEs and charities to change their account from one bank to another,” said Mark Bowerman, a Payments Council spokesman.
Currently, switching accounts takes a considerable amount of time as customers have to wait around a month before the new account is accessible. This kind of restructuring can be destabilising for an SME, but if it is handled swiftly then the benefits are obvious.
“This caused a lot of hassle, especially for small companies,” said Bowerman. “During that time, they could be missing out on payments or suppliers wouldn’t get their money.”
The new plans – which have been backed by more than 30 of the leading banks and building societies – will also mean existing payments are transferred across automatically, limiting disruption.
“If anyone puts money into the old account during the switch, it will be automatically redirected to the new one,” added Bowerman. “And the payer will be sent a message informing them to update their records with your new account details.”
Plans were first put forward two years ago with the main focus on making the banking sector more competitive, which should subsequently encourage innovation.
The dominance of the big four – Lloyds, HSBC, RBS and Barclays – has been blamed for the lack of SMEs currently prepared to switch, while a lack of competition between other banks can also not be ignored.
It is predicted that the new changes could lead to a drastic increase in companies making the switch, but only time will tell as to whether businesses take up the opportunity.
By Phil Smith
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