New banking rules ‘not enough’

BANK charges and customer service levels will come under greater scrutiny from today as new rules take effect that aim to make it easier for customers to switch between banks.

But the code has already come under fire from the Competition Authority for not going far enough.

The Irish Bankers’ Federation (IBF), the umbrella group representing the country’s banks and building societies, said its new rules would make the process of dumping a bank in favour of a rival “quick, easy and as hassle-free as possible.”

The code hopes to shake up competition in the market for current and savings accounts in the same way as rules governing the mobile phone market were changed in 2003 to allow customers to switch provider with less red tape.

Thirteen banks and building societies have signed up to making the switching process easier.

Each bank will provide new customers with a so-called “switching pack”, which will explain the actions needed from the customer, a step-by-step guide and a timeframe indicating how long the changeover will take.

Banks have guaranteed to have new customer accounts set up within 10 working days. Institutions that lose business will be obliged to forward information on standing orders and direct debits to an outgoing customer’s new bank within seven working days.

The new regime is more customer-friendly because it takes the burden of paperwork away from the customer and transfers it to the banks involved.

But the Competition Authority has already called on the IBF to change the code to shorten the timeframe involved in switching banks.

The authority said British banks had signed up to more rigorous requirements when they implemented a similar switching code.

Details of standing orders and direct debits are transferred within three days of a customer request in Britain, which compares unfavourably with the seven-day timeframe in Ireland. “The Irish Bankers’ Federation should at least match the British three-day timeframe for transferring direct debit and standing order information,” the authority said in its report on the banking market, which was published before Christmas.

The authority also wants banks to adopt common procedures for dealing with customer identification requirements and a mechanism to allow banks to share identify documents used to open customer accounts, if requested by the customer. Common direct debit and standing order forms would also make the switching process easier and faster, it said.