A stress-free way to switch current accounts

No need to hang around if your bank offers a bad deal

Breaking up with your bank shouldn’t be difficult. If you’re looking to change current accounts, here’s how to do it.

Many customers of TSB are still facing major problems with their accounts five weeks after the bank’s attempt to move its online banking services to a new IT system went disastrously wrong. Reported issues have involved scammers accessing details, some users still being locked out and even direct debits for customers who were switching away to a new bank being cancelled on the basis that these customers were thought to have died.

Perhaps the snags with departing customers aren’t totally surprising, given that the chaos has led to a huge outflow from TSB: current-account switches have risen eightfold since the problems began, according to The Daily Telegraph. Many banks are now offering attractive switching offers to capitalise on their rival’s misfortune as well. HSBC is offering the most – £200 if you open an account before 30 June – but RBS, First Direct, Barclays and NatWest are also offering new customers a cash incentive to jump ship.

If you’ve decided it’s time to move your own current account, the first step is to pick the right bank. Check the minimum deposit requirements, as well as fees and charges – and given the debacle at TSB, look at its customer satisfaction rating. Consumer group Which rates First Direct as top on this score, with RBS sitting at the bottom.

During the process of opening a current account with the new bank, make sure you confirm that you want to use the switching service. Check the switch is backed by the Current Account Switch Guarantee – this is run by Bacs, the not-for-profit organisation behind direct debits in the UK.

As part of this, your new bank will take care of moving all your existing regular incoming and outgoing payments to your new account, and any charges or fees you incur as a result of your switch should be refunded by your new bank. For 36 months after the switch, any payments accidentally made to your old account should be automatically redirected to your new account.

To open your new account, you’ll need proof of your identity. When your application is approved, fill in a “Current Account Switch Agreement” form and a “Current Account Switch Service – Account Closure” form. Then choose what date you want the switch to take place – this must be at least seven working days after your account has opened – and your new bank will set everything up, switch you over, and close your old account.

Moving an investment Isa

IT glitches have also been causing problems for customers at several investment platforms over the past few months. Cofunds, Aviva and Barclays have all had issues with their online account systems.

If you’re looking to change investment individual savings account (Isa) provider, remember that you must formally transfer the Isa to keep the tax-sheltered status intact – not simply withdraw the money to pay into the new account. To do this, fill out a transfer request with your new provider, who will arrange for the contents of your old Isa to be moved to them.

You can either opt for a cash transfer – where your investments are sold and the cash moved to your new provider – or a stock transfer, where your investments are re-registered with your new firm. The first option is quicker, but will mean you incur trading fees and are out of the market during the transfer. The second option can take four to six weeks and may incur higher transfer charges. One deciding factor may be whether you plan to stick with your current investments or are likely to change them anyway. Also check what fees your current provider may charge and see if the new one will refund you for these.

Pocket money… lock in a long-term mortgage

”The price difference between two-year and ten-year fixed-rate mortgages is the smallest in almost a decade,” says Sam Barker in The Sunday Telegraph, rekindling calls for borrowers to consider longer-term home loans.

If you had taken out a ten-year fixed-rate mortgage with a 25% deposit last month, it could have cost you just 1.04 percentage points more than if you had fixed for two years. Opting for a ten-year fix would protect you from any increases in the Bank of England base rate until 2028, but early repayment charges on long deals can be “crippling”, so make sure you are happy to lock in for a decade before you sign.

With energy-price hikes of up to 7%, perhaps it feels like it’s time to generate your own energy, says Kate Palmer in The Sunday Times. Get solar panels and a storage battery, and you can power your own home. However, you may not save as much money as you think. The new technology is not yet cost-effective, with battery systems costing from £2,500-£6,000 and solar panels for a medium-sized house setting you back £5,000-£8,000.

The amount you save depends on how much energy you generate and use. The government will pay you for generating energy, you’ll receive 4p/kWh for the energy you use and 5.24p/kWh for what you send back to the National Grid (the government currently assumes this will be 50% of the power your system generates).
It’s important to be aware that you may have to wait several years before recouping installation costs. The Energy Saving Trust website has a calculator that works out how much you could save on fuel bills, and the payments you could receive from the feed-in tariff scheme.

The Competition and Markets Authority is launching an investigation into the £2bn-a-year funeral industry to see if people are being charged too much when they lay their loved ones to rest, says Mark Sweney in The Guardian. The average cost of a funeral is now around £3,800, more than double the price back in 2004, when
insurer SunLife started tracking funeral prices. The investigation will look at the rate at which funeral directors have raised prices, as well as whether the information provided by funeral directors on prices and services is too confusing.

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