Payments regulator to oversee UK current account switching

The PSR will be tasked with monitoring and reporting on the performance of the banking industry's voluntary Current Account Switching Service (CASS), which enables current account customers to switch account providers within seven days, the Treasury said. The service is operated and managed by Bacs Payment Scheme.

The move by the Treasury will see it act on a recommendation made by the Competition and Markets Authority (CMA). It said the CMA has already "decided to strengthen the governance of CASS to provide those managing the service with stronger incentives to operate and develop the service in the interest of customers".

"As well as requiring undertakings from Bacs to address this, the CMA also made a recommendation to HM Treasury to introduce regulatory oversight of CASS by an appropriate body," the Treasury said. "The CMA proposes that either the Payment Systems Regulator (PSR) or Financial Conduct Authority (FCA) undertakes this regulatory oversight of CASS. This oversight should include ongoing review and reporting on the performance of CASS, recommending on appropriate action as necessary, and annual or periodic agreement on CASS governance arrangements and strategic plans."

"The government welcomes the CMA’s analysis and agrees to take forward this remedy. HM Treasury will ask the PSR to publish a report on the annual performance of CASS against agreed key performance indicators as specified by the CMA, including customer awareness and confidence metrics. The first report should be published within the next 12 months," it said.

In performing its new role, the PSR will have to consult with the FCA and either regulator would be free to take regulatory action if they deem it justified once they complete their assessment of how the CASS is performing, the Treasury said. It also said that it could look to strengthen the powers of the regulators to "ensure any required changes to CASS" if the regulators deem additional powers necessary.

In August, following an investigation into the retail banking market, the CMA said it would introduce measures to make it easier to switch accounts. At the time it said only 3% of personal and 4% of business customers switch to a different bank in any year, despite savings being on offer for those that do switch.