EU readies account switching rule, UK banks ready themselves

Business banking news review: week ending 12 Dec 2013

The EU has begun to make noises that account switching procedures across the eurozone should be standardised, and UK banks see the writing on the wall.

The Presidency of the Council of Ministers said this week that there are some new changes coming to the Payment Accounts Directive that needs the support of EU Ministers. These new changes will make switching personal or business bank accounts from one provider to another a standardised process by law – and that the law will be applied across borders. In other words the rules for switching banks within the UK will have to match the rules for switching banks from the UK to France, for example, though I can’t imagine why you’d want to be making direct deposits to a French bank.

Listen, I’m all for standardisation here at home in the UK, but applying these same rules across the entirety of the eurozone seems a bit silly doesn’t it? Still, there are banks that aren’t wasting any time in preparing for any regulatory changes when it comes to account switching. In one instance this week, upstart Tesco Bank has begun to chum the waters for customers of its high street rivals by announcing it will begin offering current accounts by next year.

Tesco Bank has been adding more and more financial services over time since its inception in the late 1990s, and now with the supermarket chain’s banking branch finally adding current accounts to its stable of offerings, this lead to some serious interest as customers of older banks grow tired of the poor customer service they’ve been experiencing for years.

If you ask me, I’m not fan of Tesco Bank but I think it’s good for the market to inject more competition for consumers. High Street has grown so stagnant that these banks are collapsing under their own inertia, and a fresh new face can be just what the industry needs to wake up, shake itself, and realise that providing high levels of service is the key towards keeping their customers instead of waving goodbye to them when a new innovative financials services provider comes along.

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