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Banks deliver new switching services from tomorrow
Sydney, 31 October, 2008: The Australian Bankers’ Association (ABA) said retail banks, building societies and credit unions will launch new switching services from tomorrow to assist personal bank customers wanting to switch to another transaction account provider.
Banks worked with building societies, credit unions and other payment participants in a project coordinated by the Australian Payments Clearing Association (APCA).
David Bell, Chief Executive of the ABA, said: “ABA member banks are pleased to be launching these new switching services. The new services require financial institutions to provide exiting personal customers with a list of regular payments, such as direct debits and credits, over the past 13 months. The customer’s new financial institution can use this list to assist the new customer re-establish regular payments by notifying merchants, businesses and other services providers – saving customers time and hassle.”
Switching services are not insignificant undertakings and they involve banks, credit unions, building societies, 239,000 businesses and other users. Considerable complexity was overcome.
In previous ABA research, it was found that opening or closing transaction accounts involves no consumer cost. But, in some circumstances, there may be time and hassle involved as a result of bank customers using direct debit authorities and other standing payment instructions. Customers use these services for their convenience and low cost.
Mr Bell said: “While highly convenient, when a customer moves banks, re-establishing direct debits can be a bit of a hassle. This is why banks will be introducing and promoting a switching service that helps personal customers contact their providers and change their direct payment arrangements.”
If a customer gives a phone company an account debit authority, the customer's bank is not notified. The customer’s bank is only involved when the phone company submits a payment request. It is a frustration that banks are criticised for the hassle of changing contracted agreements that they are not privy to between other parties.
A fact sheet with more information has been published on the ABA website:
www.bankers.asn.au/factsheet_switching
Notes for editors
Banks committed in February 2008 to some additional positive initiatives to assist personal bank customers wanting to switch their accounts to a new transaction account provider.
The following key principles were agreed by banks:
- The old financial institution will provide a list of the customer’s direct debit and credit arrangements over the past 13 months to the customer in order to facilitate the establishment of the arrangements for the new account;
- The new financial institution will provide the customer with information and support to help the customer make the switch. If requested by the consumer, the new financial institution will assist in notifying the Direct Entry users of the new direct debit and direct credit arrangements and assist with closing the customer’s old bank account;
- The service will be supported by obligations in industry codes of practice. This will include obligations in regards to timeliness and to provide information to customers on how to avoid exception fees, and to deal fairly with customers throughout the account switching process; and
- Industry has agreed that the service will be implemented by November 2008. A progress report on the implementation of the switching service will be provided to the Government on a quarterly basis.
APCA has been co-ordinating efforts across the financial services industry and with other businesses to have the package in place by the agreed date of 1 November 2008.
For further information:
Heather Wellard
Director, Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439
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