Over the next two years, UK banks will be busy changing the sort codes of over one million accounts. But while awareness of the scheme is still low, there are fears about the confusion many everyday users may face – concerns like, ‘Will my sort code change? How does the change affect me? Who do I need to tell?’ believed to be top of the list.
So, why might your sort code be changing?
The great sort code switch is designed to comply with new laws – known as ‘the Vickers rules’ after Sir John Vickers, who recommended the changes, coming into play in 2019. By that point, banks must ring-fence current and savings accounts from areas of the business like investment banking, which is seen as far less stable. It’s all part of a campaign which should make the banking system safer, while – in theory, at least – helping to prevent another financial crisis.
James Proudman, Bank of England director, stated that sectioning off high street or every day banking from the riskier business side will ‘improve the resilience of the largest UK banks to enhance financial stability, to maintain the provision of core UK banking services used by individuals and small businesses, and to help protect taxpayers from any further bank bail-outs.’
Is your sort code liable to change? Well, the users who will be most affected are customers of Barclays and HSBC, as well Santander’s overseas customers, although this is sort code switch is being undertaken by the top five UK banks, so if you bank with Lloyds, Halifax or the Bank of Scotland, you still might be affected. If you hold an account with an institute like Nationwide, you’re in the clear, as the new legislation doesn’t cover building societies. Smaller banks, which hold less than £25 billion, are also exempt.
You’ll know if your sort code is changing, as your bank will write to let you know – also, expect emails and pop-up notifications when logging in to your internet banking. Your bank wants you to be fully prepared for the switch. It won’t happen overnight – Barclays has already confirmed that they’ll deliver new sort codes in batches, to ensure a smooth roll-out and confirmed that ‘Customers impacted will be informed ahead of time and there will be no interruption to their banking.’ Indeed, it’s their plan to deliver all new sort codes over 2018’s Easter weekend.
Although updating your details quickly is advised, your existing sort code will still work for three years after your new one has been issued, so you’ll have time to let those who need to know know. And who do you need to tell?
Essentially, you need to inform anyone depositing money into your account. The banks have already confirmed that things like Direct Debits, standing orders and other bills coming out of your account won’t need to be altered – it’s business as usual, with HSBC stating that:
‘For most of our personal and business customers impacted, the process is automated and we will automatically update any regular payments like standing orders and direct debits.’
The main priority, then, is to inform your employer, and anyone else intending to pay into your account. With banks working hard to ensure a smooth roll-out, communicating what’s happening and what you need to do, you should find the switch simple.