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Switching accounts will be easier following banking reform, says Osborne

 

From September individuals and businesses will be able to switch accounts to rival banks within seven days, as part of plans to encourage greater competition in the banking sector.

 

A customer’s direct debit payments and standing orders will be transferred across with a minimum of hassle in what the Chancellor has hailed as ‘a revolution in customer choice.’

 

Bank customers will also be able to transfer money between accounts within hours rather than days, under new measures outlined in the Government’s Banking Reform Bill.

 

In a recent speech, George Osborne said: ‘Why, in the age of instant communication, do small businesses have to wait for several days before they get their money from a credit or debit card payment? Why do cheques take six days to clear?

 

‘Customers and businesses should be able to move their money round the system much more quickly. Why is it that big banks can move their money around instantly, but when a small business wants to make a payment it takes days?’ he asked.

 

It is hoped the changes will improve the service for small businesses and private individuals, who often incur lengthy delays when changing accounts or transferring funds.

 

Commenting, Katja Hall, CBI Chief Policy Director, said: ‘A healthy banking sector needs both challenger and established banks to thrive, so the ideas to boost competition, outlined by the Chancellor, will need to be scrutinised in detail to ensure they deliver this.

 

‘Small businesses in particular should benefit from the ability to switch current accounts quickly and easily.’

 

The measures are just some of the sweeping reforms included in the Banking Reform Bill, which was introduced to Parliament earlier this week. Other changes include plans to introduce an ‘electric ring-fence’ which will force banks to separate their high street operations from the riskier investment arms.