Changing account — don't bank on it being easy
Thousands of banking customers need to work out how they can transfer their current accounts before their bank pulls out of the Irish market.
It’s well over a year since Ulster Bank’s parent company Natwest announced it would be pulling out of the Irish market after 160 years.
Its chief executive Jane Howard said the changes for customers “will happen over the coming years” but one of those changes looms large — the move of some 90,000 accounts to a different bank.
Add in that KBC is also leaving the market, and that means another 100,000+ accounts that will need to change.
Many account holders will have to make that switch sooner rather than later, given the Central Bank said last month that the banks that are leaving as well as the remaining banks are “not yet where they need to be” in terms of managing this process.
Then, this week, the Central Bank wrote to the CEOs of major banks inviting them to a roundtable meeting on the matter, expressing “a number of concerns” emerging for consumers.
Its director of financial conduct said the Central Bank acknowledged the hard work being done by staff and was aware of the impact on both staff and customers.
“But while recognising the challenge an exercise of this scale represents, it is also clear that, in terms of the banks’ overall plans, more needs to be done," she said.
These two banks leaving the market will mean millions of direct debits, standing orders and payments will come over to brand new accounts. Industry figures have concerns over how this can all be done over the next few months.
At the moment, Ulster Bank is writing to its customers to inform them of the need to switch their accounts within the next six months.
KBC on Friday announced it is extending the notice period for the closure of current accounts from 90 days to six months.
So, what’s the big deal? And should you be switching now?
If you are with Ulster Bank or KBC, it’s not just a simple matter of going to the branch of another bank in your locality and signing up.
In some cases, there might not be a branch nearby. AIB closed six branches in Cork last year. Bank of Ireland closed nine.
Fortunately, most Irish banks will let you open accounts online or by phone.
Daragh Cassidy, head of communications at Bonkers.ie, said: “The issue is opening a new account and transferring over direct debits and updating standing orders.
“The process of opening an account has been streamlined by most banks over the past few years and most current account providers now allow you to open an account yourself online or through your smartphone in around 10 minutes.”
Fonz Scanlan, financial planner who runs moneysmart.ie, said that “things are better when it comes to switching than it was a few years ago”.
“We don’t know, but the proof of the pudding will be in the eating. There’ll be a lot of stressed bank account holders out there soon,” he said.
Both Mr Cassidy and Mr Scanlan were clear in their advice — don't wait till you receive that letter from the bank, make the change as soon as you can.
“Customers also need to be aware that there’ll be work involved in transferring over direct debits and updating standing orders,” Mr Cassidy said.
“There is technically a Central Bank switching code in place. Under this code, your new account is supposed to be up and running in 10 days and anyone switching is supposed to receive help with moving their direct debits and standing orders.
“But switching can’t be done online and the transfer of direct debits and standing orders under the switch code doesn’t always work smoothly to be honest and the customer usually ends up having to do some of the legwork themselves.”
Mr Scanlan said that it will be very important that banks have in place the facilities to process new account applications and ensure people can switch quickly.
“The current account is the absolute core of all of our finances,” he said. “All our direct debits, our standing orders, our credit cards are linked to it. It’s so important. I know most people, in my experience, will not act in advance when it comes to financial services. But they really should act now.”
For its part, Ulster Bank has dedicated a section of its website with advice for people who’ll need to switch. Advice is also available on the Competition and Consumer Protection Authority wesbite regarding switching.
When it comes to the other banks, Bank of Ireland said this week that is deploying 500 additional staff to support the opening of new current accounts along with a dedicated phone line.
The Central Bank has been clear that it’s incumbent upon the banks to cater for customers and said it will use the roundtable meeting in May to “reinforce” the expectations it has of banks to provide this assistance.
In the meantime, Mr Cassidy of Bonkers.ie said that customers of Ulster Bank and KBC should take some time to set up their new accounts themselves and make sure it’s all in order.
“Rather than use the switching code, I’d recommend people open an account themselves online if they can — which should only take minutes. And then gradually move over direct debits and standing orders themselves.”
He also had this advice for people making that switch: “Remember that many payments for things like Netflix, Amazon Prime, many gym memberships, GoMo, and Spotify aren't direct debits — they're what's called recurring payments, which are linked to your debit card number (as opposed to your bank account number).
“These types of payments fall outside of the switching code so this means it is up to you to change these yourself. Also, you’ll have to update your employer or anyone else who pays money into your account (such as Social Welfare) with your new bank account details as your new bank cannot do this for you.
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