Ever wanted to move money between banks in a hurry? If you have, you will have found it a very irritating experience. Until this week, you had two choices. You could either use the 25-year-old Bacs money transfer system, which meant the whole thing would take at least three working days – days during which neither you nor the holder of the destination account would receive any interest at all.
Instead, it disappeared into the banking system, earning the big banks an estimated £30m last year. Otherwise, you could have used the equally old-fashioned CHAPs system, for which your bank would have charged you £30, on the basis that it’s a labour intensive thing to do.
Good news then that on Tuesday Britain’s banking system finally joined the technological age. A new system – Faster Payments – was put in place, which should allow money to be moved in a matter of hours – even at the weekend. This will remove the minor irritation of the interest issue (this amounts to only a few pence on the average transfer, but everyone hates the feeling they are being ripped off by their bank). More importantly, it will mean that the 475 million standing orders, online payments and telephone payments made in Britain happen when we want them to.
Sadly, there’s bad news too. So scared are banks of having a “Terminal 5 moment”, or perhaps of losing a nice little income earner all at once, that the new system (already delayed from last November) is to be phased in. Different banks will implement different bits at different times, and the system won’t deal with standing orders at all until 6 June. And even when everyone’s using Faster Payments properly, you’ll only be able to transfer a total of £10,000 (and not even that until July if you’re with Barclays).
Still, while it isn’t perfect, this does represent good change and so far none of the banks have had the nerve to suggest they might charge for it. They didn’t exactly do it in a hurry – consumers have been lobbying for the new system for years – but at least now it should bring them some good PR.
And it’s PR they sorely need. Last week it emerged they are to appeal against the recent High Court judgement that was to let the Office of Fair Trading rule on whether overdraft penalty fees are fair. The stakes are high here, says Emma Simon in The Sunday Telegraph: the banks make an estimated £3.5bn a year from these charges, which means we can expect a failed appeal to be followed by “further legal wrangling in the House of Lords and European courts”. It took eight years to get the industry to sort out its “antiquated” transfer system. It might take just as long to get it to accept that pushing people into debt with penalty charges is no way to help them out of it.