Switching Current Accounts – The 7 Day Guarantee
In September 2013, the government introduced new measures to simplify the process of switching bank accounts in an attempt to make the banking industry more competitive.
The regulations have forced banks to improve the current accounts they have on offer in order to retain existing customers and to convince new ones to switch to them.
We’ll go through the details of the 7-day switching guarantee and we’ll explain exactly how it’s improved the banking industry for customers across the country.
What is the 7-day switching guarantee?
Historically, Barclays, Lloyds, HSBC and the Royal Bank of Scotland, known collectively as the ‘big four’, have dominated the current account market.
This was thought to be, at least in part, down to long and complicated process that customers used to have to go through in order to switch accounts.
The majority of people tend to stick with their first current account throughout their life for the sake of simplicity but now, the 7-day switching guarantee is changing this.
Indeed studies, conducted when the legislation was going through, reported that 42% of customers said that once the 7-day guarantee was in place, they’d be far more likely to change to a different current account provider.
Almost all current account providers are now signed up to the 7-day system, meaning that if you want to change banks, you’ll be able to do so easily and quickly.
All you need are the details of your existing current account. You’ll need to fill in two forms to complete the switch:
A Current Account Closure Instruction Form to close your existing account, and
A Current Account Switch Agreement, to open up your new account.
You’ll be able to keep using your old account until the designated switch date, meaning that at no point during the process will you be unable to access your money.
All of your direct debits and other payments, including your salary, will be transferred over to the new account straight away along with your existing balance.
Your old provider will be under legal obligation to send any payments into your old account straight to your new one for 13 months after the switch has been made.
How has it improved banking for customers?
Simplifying the switching process has acted as a strong incentive for the various banks to improve their services so that they keep their old customers and acquire as many new ones as possible at the same time.
This has led to a battle between banks that customers are certainly benefitting from.
From offering lump sums of cash, or other perks from free travel cards to monthly cash-back, banks are fighting tooth and nail to make their current accounts the most attractive on the market.
So as the switching process has simplified and improved, so have the services offered by the banks, meaning that the big four in particular have far less room for complacency that they did before.
Compare Current Accounts Online
If you want to take advantage of the 7-day switching guarantee and change your current account provider, then the first thing you should do is have a look at the different accounts available to you.
Head over to our free current account comparison page and we’ll get you a list of the best accounts on the market with details of any reward schemes so that you can find out exactly how you could benefit from switching.