FOURTH PROGRESS REPORT ON IMPLEMENTATION OF AN ACCOUNT SWITCHING FACILITATION PACKAGE
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I. Background
1. This is the fourth progress report on the implementation of an Account Switching Facilitation Package (the Package) by APCA. The first preliminary report was submitted on 3 April 2008 and outlined the initial business requirements and implementation plan for the Package. The second and third reports, which confirmed progress on implementation was continuing, were lodged on 30 April 2008 and 30 June 2008 respectively.
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The Account Switching Focus Group (ASFG), the group tasked with implementing the Package, has continued to further refine the business requirements of the Package and to develop generic guidelines for customer use which will be available on the APCA website.
II. Overview of the Account Switching Implementation Package
3. The ABA, Abacus and APCA advised Treasury on 7 February 2008 of an industry agreement to develop an account switching facilitation package with the following features: •
The old financial institution will provide a list of the customer’s direct debit and credit arrangements over the past 13 months to the customer in order to facilitate the establishment of the arrangements for the new account;
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The new financial institution will provide the customer with information and support to help the customer make the switch. If requested by the customer, the new FI will assist in notifying the billing or crediting organisations of the new direct debit and direct credit arrangements.
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The service will be supported by obligations in industry codes of practice. This will include obligations in regards to timeliness and to provide
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information to customers on how to avoid exception fees, and to deal fairly with customers throughout the account switching process. •
Beyond what was agreed, APCA also undertook to develop generic information and support material for customisation by FIs in supporting consumer account switching.
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APCA, through its Low Value Payments Industry Direction Project, also agreed to ensure that convenience of switching direct debit and credit arrangements is considered in the development of future payment system proposals.
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It was agreed that these initiatives would be implemented by 1 November 2008, with bi-monthly progress reports made to Treasury.
III. BECS Procedures
5. At the last meeting of the relevant Management Committee responsible for overseeing BECS (MC2), held on 19 August 2008, amendments to the BECS Procedures were approved and become effective on 1 November 2008. These amendments place obligations on the old FI, new FI and DE Users to give effect to the Account Switching Package in accordance with agreed timeframes.
IV. Generic Guidelines
6. Part of the Account Switching Package is a set of generic guidelines for customers wishing to switch their accounts. This provides customers with the necessary information to take the steps to complete a switch of accounts and promotes consistency across the industry. 7. The draft guidelines have been approved by the ASFG and copies have been made available to the Treasury and consumer groups for further comment and feedback. The generic guidelines will be issued to MC2 for approval in
September 2008.
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V. Transitional Period
8. In the third progress report mention was made that there will be an initial transition period of up to 13 months when some details for earlier months could be missing from the customer list of direct debit and credit arrangements. A survey of BECS Participating Members revealed that as at 1 November 2008: • Thirty-one members, including the four majors, will provide 13 months of complete direct debit and credit arrangements for the customer. These members are responsible for 85.3% of national transaction volumes (ntv); • Five members (8.2% of ntv) will provide 13 months of direct debit and credit arrangements for the customer containing complete information for the last three to six months. For the remaining months, full details will be progressively made available; • Thirteen BECS Participating Members (1.5% of ntv) do not offer transaction accounts to retail customers and are therefore exempt from this initiative; and • APCA has contacted the remaining 5 members (5% of ntv) to ascertain their position during the transition period. From the figures obtained in the survey, the new FI will be able to identify the DE User to be notified of the customer’s change in account number in the majority of cases.
VI. BECS Participating Members progress
9. BECS Participating Members are reporting their progress to APCA on a monthly basis. As of 15 August, of the fifty-five BECS Participating Members: • • • Fifty-three members have reported progress to APCA. These members are responsible for 99.8% of national transaction volumes (ntv); APCA has contacted the remaining 2 members (0.2% of ntv); Thirteen BECS Participating Members (1.5% of ntv) do not offer transaction accounts to retail customers and are therefore exempt from this initiative; and
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One BECS Participating Member (0.05% of ntv) is currently in the process of replacing its core banking systems and expects to fully meet the account switching initiative in early 2009.
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The remaining thirty-nine members (98.45% of ntv) report satisfactory progress towards implementing the Package.
VII. DE Users
10. The success of the Account Switching Package depends on the cooperation of the large number of “DE Users” – third parties that generate regular payments to and from consumer accounts through their own financial institution. The package includes arrangements designed to facilitate cooperation by the DE User community. 11. The ASFG agreed at its last meeting that all User FIs will formally advise their DE Users of the implementation of the Account Switching Package prior to the 1 November 2008 implementation date and will seek their cooperation in giving effect to the package. 12. In some instances, the DE User will itself be an FI. This will occur when a third party customer of the FI uses an Internet Banking package (or other proprietary system) to generate regular payments to or from an account that is being switched (e.g. a ‘pay-anyone’ to provide a weekly allowance to a son/daughter). These payments will, like other regular payments, be listed on the regular direct debits and credits provided by the ‘old FI’ to their exiting customer. The User FI will undertake a trace to identify the party that initiated the recurring payment and inform them of the new account details of the switching customer.
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