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Sunday, 15 July 2012

HOW TO MOVE YOUR CURRENT ACCOUNT


A brief poll of my tweeps found the overwhelming majority of those who had moved their current account found it easy and trouble free. The ones who hadn’t moved were afraid it would be difficult. But almost no-one had encountered problems.

Step 1: Pick your new bank. Which really means decide why you're leaving the old one. Is it for moral reasons – you just don’t like the way banks behave. Or you're fed up after computer failures. Or you want better customer service or to be paid interest on your current account? And remember not only banks have current accounts. Five building societies do as well and so do 24 credit unions. See WHICH BANK below.

Step 2: Go to the website of your chosen bank (or building society or credit union) and apply for a current account. I say ‘apply for’ because you can choose your bank but it might not choose you. The bank (etc) might say no if you have an overdraft or a poor credit record. If so try another. If it happens again see BAD RISKS below.

Step 3: Your new bank (etc) will ask if you want to move your direct debits and standing orders to your new account. Say yes and that should happen automatically without a payment being missed. Print off a list yourself and check with your new bank. It can be a good time to check you know what they are all for and cancel those inactive direct debits.

Step 4: You will normally have to tell your employer or pension provider to pay your money into the new bank account. The same applies to any tax credits or benefits – tell HMRC and DWP. In fact tell everyone who is due to pay you money. Some banks will do this for you. If you have a debit card registered to pay at online sites remember to change those details too.

Step 5: Do not close your old account. Keep a balance in it to meet any payments that might not have changed. Check frequently that things have happened correctly. There may be the odd hiccup but they are soon put right if you keep your eye on things. The whole process should take less than a month or so. The official timetable - agreed by the Financial Services Authority so the banks must do it - is here  
http://www.thesmartwaytopay.co.uk/sitecollectiondocuments/account_switching_timeline.pdf. But note that when it refers to a number of 'days' that excludes weekends and public holidays.

Step 6: After a couple of months close your old account.

You’ve moved banks!

If you have a complaint about the moving process you should make it in writing to the bank. If it is not resolved within eight weeks go to the Financial Ombudsman Service www.financial-ombudsman.org.uk/consumer/complaints.htm. You can also call the Ombudsman office for advice.

WHICH BANK?
There are dozens of banks in the UK.

The five big banks are Lloyds/Halifax, Barclays, RBS/NatWest, Santander, HSBC/First Direct. They can offer the best deals and the fastest service. The way they treat customers can vary greatly. First Direct is usually top. You can find out the ones with most complaints here

Some banks will pay you to open a current account. Some pay interest on the balance. Some want a minimum amount going in each month. Some will try to sell you an account you pay for each month but always resist as they are almost never worthwhile. Check the overdraft charges.

There are five smaller banks. None of them plays the markets with your money like the big five do. Co-operative is about to buy 632 branches from Lloyds and will then be the sixth biggest in terms of branches. It is a mutual and has an ethical policy about where it invests its (your) money. Smile is its online bank. Yorkshire Bank and Clydesdale Bank are both owned by National Bank of Australia. Handelsbanken is Swedish owned and has 115 branches in the UK. It prefers wealthier customers. Virgin Money now has 75 branches and will operate current accounts later this year. Metro Bank is mainly inside the M25 with a dozen or so branches but is growing rapidly and says it offers specially friendly service in its branches. More about four of these banks www.paullewis.co.uk/archive/saga/2012/20120301Works.htm.


Five building societies offer a current account. Nationwide is by far the biggest and the only one which is a ‘clearing bank’ – in other words it does not have to rely on one of the big five to process its accounts. With a total of 800 branches – including its subsidiaries Cheshire, Derbyshire, and Dunfermline – it is seventh in branch numbers after an expanded Co-operative. The other four societies with current accounts are Coventry, Leeds, Norwich & Peterborough, and Cumberland.

Building societies are mutual organisations which are owned by their customers. So there are no shareholders taking dividends out of the company. Their directors are paid far less than the directors of big banks. And they do not gamble money on international markets.

Twenty four credit unions offer current accounts. They may take longer to process payments but all should do payments by the next working day. They are generally small organisations with the advantages and disadvantages that brings. And there may not be one in your area. You can find a list here www.abcul.org/about/productsservices/cuca and find the credit unions that you can join here www.findyourcreditunion.co.uk. Credit unions are mutual organisations too.

In Northern Ireland there is Northern Bank which will soon take the name of its owner Danske Bank. First Trust Bank is owned by Allied Irish Bank AIB. Ulster Bank is part of RBS Group. And Bank of Ireland has many branches.

BAD RISKS
If a bank does not like you it does not have to do business with you. If you have an overdraft it is harder to move your current account. If your credit record is poor – and that can just mean you don’t have any credit cards or a mortgage or loan – then you may be rejected. Other things that give you a bad credit score are moving home frequently, not being an owner occupier, having late or missed payments on your record or court judgements for debt against you.

You can check your credit record at the three credit reference agencies. You have a right to a copy for just £2. You can get those here

If there is an error on your record the agencies must correct it. If you have a poor record but there was a good reason for it or there is a dispute over a payment, you can add a ‘notice of correction’ which has to be read by anyone using the record.

The credit reference agencies will all try to tempt you to pay them every month for regular reports, credit scores and other extras. There is no need to do that. But if you want a free credit report then sign up to the free 30 day trial they offer and cancel it as soon as you get the first. If you cannot see how to cancel it on the website just tell your own bank to cancel the payment authority. It has to do that and refund any payments taken subsequently - see http://paullewismoney.blogspot.co.uk/2012/04/continuous-payments-racket.htmlCallcredit has a subsidiary called Noddle which offers a free credit report for life. It makes its money by encouraging users to do deals with financial service providers.

Some banks will expect a minimum income and others will not want customers whose only income is from benefits. All the big banks have agreed to offer a basic bank account even to bad credit risks. These accounts do not have overdrafts but most do allow direct debits and standing orders. If you have been bankrupt in the last six years or you have a fraud flag by your name you may be rejected. The organisation that records fraud allegations is called CIFAS. You have a right to know if it does have your name on its fraud database. But it may be very hard to find out much else about it. Contact CIFAS here www.cifas.org.uk/enquiries_and_complaints. Ask which bank made the fraud allegation so you can challenge it with that bank. Banks are very resistant and difficult about providing any information if fraud is suspected. If you are not guilty of any fraud and all your attempts to put things right have failed then threaten CIFAS with court action for spreading damaging and false information. See http://news.bbc.co.uk/1/shared/spl/hi/programmes/money_box/transcripts/money_box_30_june_12.pdf and search for Fred.