Under guidelines published by the Department of Trade and Industry (DTI) [now the Department for Business, Enterprise and Regulatory Reform -- BERR] in October 2003, banks aren’t allowed to dawdle when closing down an account or opening up a new one. In a move designed to speed up the process for business account holders, banks now have a set period of time to close an account and to transfer all direct debits, standing orders and other arrangements to the new account.
The targets, in force since 31 December 2003, outline the duties of both old and new banks.
The old bank is required to:
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| Forward new bank, and/or small firm as requested, details of small firm's existing direct debits (DDs) and standing orders (SOs) |
By the close of business on the second working day following the working day of receipt of the request. |
| Action request by new bank or by small firms to cancel DDs and SOs |
By close of business on the second working day following following receipt of the request, or at a later date agreed by the small firm |
| Where applicable, action request by new bank or by small firm to transfer the available balance remaining in the account with it to new bank or to small business. If requested, close account. |
By close of business on the third working day following the receipt of the request. An additional working day is applicable where the small firm or new bank has requested closure of the account. |
| Where applicable, on receipt of sufficient cleared funds from bew bank or small firm to clear balance of small firm's overdraft (including interest and costs), level off small firm's account and, if requested, close account. |
Within three working days following the receipt of the funds from small firm or new bank. An additional working day is added if the account is to be closed. |
The new bank must:
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| Following receipt of details of regular payments (DDs and SOs) set up, in accordance with any instructions from small firm, new DDs and SOs. |
By close of business on the third working day following the working day of receipt of details of such regular payments or at a later date if specified by the small firm. |
| Where applicable and requested by small firm, send request to old bank to transfer to it the available balance remaining in the old account. |
By close of business on the second working day after the working day of receipt or at a later date, if requested by the small firm. |
| Where applicable, and provided small firm has put new bank in a position to do so, action request to transfer to old bank funds, in accordance with small firm's instructions, to clear balance of small firms' overdraft, including interest and costs. |
By close of business on the second working day following the working day of receipt of the request or at a later date if agreed by the small firm. |
It’s worth remembering, however, that the targets shift depend on whether you have a secured overdraft or not. Check with your bank over how your circumstances affect the targets.
In addition, most banks are signed up to the voluntary Business Banking Code, which dictates that the old bank must inform the new bank of standing orders and direct debits within three working days, provide a credit history and transfer an account in 10 working days.
The code also requires banks to cancel any charges suffered by account holders as a result of any mistake or delay when transferring accounts.
For an impartial account checker and full details on banking codes, visit the BBA website