Small businesses will soon be able to switch their accounts between banks more easily, as a result of changes to bank competition rules.
The Bacs Payment Scheme – the organisation responsible for the majority of the UK’s automated payments – have agreed to put into operation a number of improvements to make the retail banking market more competitive for businesses.
The move follow an investigation carried out in 2016 by the Competition Market Authority (CMA). According to the CMA’s report, only four per cent of UK business owners currently switch banks in any given year, despite the prospect of being able to save an average of £80 a year in fees by doing so.
As a result, the main change will see an extension of the redirection service managed by the Current Account Switch Service (CASS), which was launched in 2013 to make switching current accounts a simpler and more reliable process for both personal and business banking customers.
As part of the CMA’s recommendations, CASS will now be managed by an independent chair person, rather than by the banks it represented, to guarantee the service works in the interests of customers.
Thanks to this change consumer groups and price comparison sites, as well as lenders, will now be able to influence how CASS operates and promotes itself.
In response to the changes pledged by Bacs, Chair of the CMA retail baking market investigation, Alasdair Smith, said: “Improvements to the switching service will give customers better information about, and so greater control over, their finances. This in turn will make it easier to move money and capitalise on better offers.”
It is believed that the 17 recommendations made by the CMA will result in savings of between £700 million and £1 billion over the next five years for bank customers.
“Switching is the key way for people and small firms to find better banking deals and save. Our investigation demanded that banks worked harder for their customers,” added Smith.