Ulster Bank and KBC are on the way out of the Irish market, and hundreds of thousands of current and deposit accounts must find a new home. With the clock ticking down, there have been warnings that the financial system faces chaos as consumers scramble to find new service providers.
The problem — or at least, part of the problem — is that changing current account isn’t like switching gas or electricity supplier. A bank account is a complex ecosystem of inward and outward flows. When you move provider, someone has to ensure that those flows are uninterrupted and that no one is disadvantaged by the commercial decisions of the institution.
Testifying before the Oireachtas finance committee last month, the Central Bank’s director of consumer protection, Colm Kincaid said that when it comes to managing the transfer of accounts, both the exiting and the remaining banks are “not where they need to be at this stage”.
Labour finance spokesperson Ged Nash believes that the customers of the departing banks could be exposed to weeks of personal and business banking chaos.
He said: “This has massive potential to be hugely problematic if both the exiting and receiving banks do not have the staff and make the necessary resources available to work with all their customers. The reality is that a missed mortgage or loan repayment has major consequences and the potential for this to happen needs to be avoided at all costs.”
What have the banks themselves said about the move?
KBC has said that it will give customers six months’ notice to close their accounts and will start that process next month.
This implies that the Belgian-owned bank will be phasing these contacts over several months as part of its exit strategy. In turn, this implies that customers will have until around the end of the year at the very least to close their accounts.
KBC has also said that customers don’t have to take any action until the bank gets in touch, and that all services will continue as normal up until then. Once the bank issues notice that you have to close your account, it will stop charging maintenance fees.
Nor will mortgage customers have to do anything until they hear directly from the bank.
Ulster Bank has also said that it will give current and deposit account holders a notice period of six months. Ulster Bank has in fact already begun sending letters to these affected, and as with KBC, it’s anticipated that current account closures will continue into 2023. This phased process is designed to ensure that there aren’t spikes in switching activity which staff across the sector might struggle to process.
Ulster Bank has around 360,000 active current account customers, more than double KBC’s. In addition, they have around 300,000 active deposit accounts.
We still don’t know Ulster Bank’s plans for credit card and personal loan customers, but it’s expected that the bank’s credit card customers will be asked to pay off balances and close their accounts early next year.
If you’re one of those who will need to find a new current account in the coming months, the best place to start is the Competition and Consumer Protection Commission’s (CCPC) current account comparison tool, where you can see who’s offering the best value.
Fee structures across the banks used to be similar, which implied that switching didn’t make much sense. These days, however, particularly with the arrival of virtual banks, moving current account provider can save you quite a bit, so it’s well worth shopping around.
It’s also worth considering either N26 or Revolut, which are the two digital alternatives to traditional banking. You can open an account in minutes on your phone and both offer largely free day-to-day banking. There’s no monthly or annual maintenance fee with either provider and there’s no charge for chip-and-pin or contactless transactions. There’s no fee for standing orders or direct debit payments either.
Withdrawing cash is a bit different. With N26 you get three free ATM withdrawals a month. After that, there’s a hefty €2 charge per withdrawal. Revolut allows you to withdraw €200 a month or make five withdrawals. After that, you’re charged either €1 or 2% per withdrawal, whichever is higher. Both N26 and Revolut support Apple Pay and Google Pay.
The Central Bank operates a switching code which is designed to streamline the switching process; banks are required to complete the switch within 10 days. The CCPC says however that not all current account providers use the code and a switch can sometimes fall over if the account has too much activity on it.
It says: “The switching code requires that your old provider and new provider work together to make a seamless transition. But we would still advise you to be proactive in checking that each stage is being completed.”
If all goes according to plan, your old provider should notify any company that you have a direct debit with of your new account details, so that they can update their records. They should send your new provider a list of your standing orders. Your new provider should set these up to go out from your new account. The balance of your old account should then be transferred into your new account.
The other thing to be aware of during these transitional months is that the fraudsters are already trying to capitalise on the uncertainty.
Fraudsmart is the Banking and Payments Federation’s fraud awareness initiative. It expects criminals to try to take advantage by contacting people through scam emails, scam SMS messages, scam social media messages, or scam calls.
Their aim, as always, is to get hold of bank account and card details and use them to steal your money.
“The fraudsters will try to panic or rush you into clicking on a link which brings you to a fraudulent website,” Fraudsmart says. “You will be presented with an option to choose a new bank, and the next page will look exactly like that bank’s website.
“Alternatively, they might try to persuade you to download an app which drops malware onto your phone or PC that enables them to take over your existing account.”
Look out for messages that suggest your salary is about to be cancelled, or that the details of your standing orders and direct debits to service providers need to be updated.
For example: “This is your HR department. We are moving the company bank account to AIB and all employee bank details must be updated. To ensure there is no disruption to your next salary payment, please confirm you details by clicking here.”
Or: “Hi, this is Netflix. Your card details appear to have changed and we have been unable to take your last payment. To ensure there is no disruption to your service, please update your details here.”
Never click those links!