Saturday, 8 December 2012

One Small Problem...

At the bottom of this article by the Daily Mail, about so-called 'Zombie Britain' are these words of wisdom from our beloved Prime Minister on helping to boost our flagging economy:
Competition could be boosted by breaking up nationalised banks and giving customers a single transferable account number, David Cameron suggested yesterday.

The Prime Minister signalled that he favoured the idea of making it easier to switch between banks.
He added that ministers would consider the need to increase choice on the High Street as they sought to return RBS and Lloyds to the private sector.
It echoes a comment made by another Tory MP Andrea Leadsom, a Treasury Select Committee member back in September this year:
...Andrea Leadsom has called for regulators to force banks to allow customers to keep their account number if they switch to a new bank...[she] told the Mail on Sunday that portability would make it easier to switch accounts and would enhance competition. She said it "might take a regulatory push to make it happen".

Her stand follows a poll released by Which? last week, in which 59 per cent said that they would be more likely to move banks if they could take their account number with them.
One small problem.

Here's an EU Commission staff working document from 2005 (Annex to the proposal for a Directive of the European Parliament and of the Council on Payment Services in the Internal Market - Impact assessment {COM(2005) 603 final). It says:
It was decided that legal requirements for the “ portability of bank account numbers ” should not be taken up.
The reason being...? (my emphasis)
The benefit of the introduction of a mandatory rule ensuring the portability of bank account numbers is to facilitate mobility of customers. Currently the cost for changing from one bank to another is very high. Bank account portability is expected to facilitate competition. However, studies carried out in some Member States (UK, NL) regarding this question of portability have shown that the recently introduced EU-wide IBAN-BIC[94] numbering system is not compatible with the portability of account numbers without incurring in disproportionate costs and provoking problems for efficient straight through processing.
The Commission believes that after the considerable investments in the development of the IBAN-BIC numbering systems, time is needed for this system to prove its effectiveness. It would not be appropriate at this stage to impose a modification of the system. Nevertheless, the IBAN-BIC system appears to be a very complicated system and may need to be simplified in the long run. Therefore the Commission advises the banking industry to launch studies in order to create, in the long run, a more simplified numbering system for payments in the Internal Market.
Introducing portable account numbers would mean current International Bank Account Number (IBAN) and BIC standards – which have been adopted by the European Committee for Banking Standards as the standards for the Single Euro Payments Area (SEPA) formats - would have to be abolished and replaced.

In other words it ain't going to happen anytime soon.


  1. I would have thought that if it had been in the interests of the market, then portable bank account numbers would have happened years ago...

    ...From my pov such a thing would be more advantageous to the government or the bank and its customer, in that they now have yet another piece of information...

    ...If they should fail to get it all at the first pass... (income tax), or the second pass (VAT) ...(I simplify)... There will now be a third opportunity, they can just tell the bank to empty such and such an account, as this person is dead, in jail, in hospital, or persona non grata... (whatever).

    As ever, cash is king (as long as that cash was not printed by the government).

  2. @right_writes, as always the dead hand of the EU lies behind these things even if it's in the interests of the market.

    But as your comment right alludes to, bank account numbers have far more impact on our lives than mobile numbers...which is the comparison Cameron is trying to make in terms of portability.

    Yet another unworkable vacuous comment from the man purporting to be our PM