Government helps banking customers – and hurts them too

Business banking news review: week ending 20 March 2014

In one fell swoop, the Government has managed to both help countless banking customers whilst also alienating them at the same time – a remarkable feat indeed.

First, the good news – a new Government initiative, designed to make switching current accounts from one banking provider to another, is being adopted by the largest banks in the UK. And when I say largest banks I mean High Street heavyweights such as Santander, Nationwide, Barclays, Lloyds TSB, HSBC and Royal Bank of Scotland.

The core of the new initiative involves making standardised information to anyone interested in comparing bank accounts in order to make a decision. Consumers who use comparison websites will most likely benefit the most from the new scheme, especially if the site in question offers several of the industry’s best deals all at once to take in.

So yes, that’s the good news, and  a prime contender for a helpful bit of change in the world of financial services provision – however there’s a dark side to all this good news, and it’s this: the Government has decided to put new legislation in place that could give Her Majesty’s Revenue & Customs to raid your accounts in order to take care of any unpaid tax.

That’s right, if you’ve got more than £1,000 in tax debt and you’ve already been contacted several times by the taxman but you haven’t paid up, then the new language in the budget will permit HMRC to simply go into one of your bank accounts and strip out the money they’re owed.

Yes, there are limits thank goodness. You can’t be drained under £5,000 across all your accounts, which means that people already under that threshold are safe. Still it’s a bold move, and it’s going to ruffle more than a few feathers across the UK. Most people are probably going to think that HMRC is simply out to get them, and the news of this development comes hot on the heels of the one remarking how there were so many High Street banks falling in line with the new streamlined account switching rules will likely make most people think that the tax authority doesn’t know which end is up after all.

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