New sort codes warning in bank shake up

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The British Bankers’ Association (BBA) says a planned shake up of the banks could force millions of people to have a new bank account sort code.

In its submission to the Prudential Regulation Authority on implementing ring-fencing, the BBA spelt out some of the challenges that will need to be overcome if the changes are in force by 2019. 

To reduce the need for future taxpayer bailouts banks are being forced to ring-fence their high street operations from investment banking.

The new rules could mean many high street banks will be forced to restructure themselves, which could mean many people will find they are customers of a different legal entity. According to the Telegraph this could mean millions of customers will be forced to change sort codes.

Banks have until January 2019 to comply with the rules, however the BBA has warned of challenges.

In a response to a consultation on the issue, the BBA said ring-fencing would have a considerable impact on payments, in particular around what happens to sort codes.

The industry trade body said: “Since only one legal entity can own a sort code, there is a prospect that sort codes may have to change for tens of millions of customers. This would impact not only the account holder but payees, and would also disrupt bank reference data used for payments integrity purposes and by third parties”.

The shakeup could also have an impact on the Land Registry and Companies House as they may mean changes need to be made to millions of records, the BBA added.

Executive director Paul Chisnall said: “In order to deliver the reforms on time, banks, the regulatory authorities and a number of government agencies will need to pull together to avoid any bottlenecks. In particular, we would like the regulators to try to put in place the new regime as quickly as possible to allow banks to make final decisions about how to structure their businesses”.

The BBA added that the impact would be similar to the changes seen by Lloyds customers who were switched to TSB in 2013 - a process that was seen as causing minimal disruption; however, the BBA said the effect would be much greater:

“The scale will be much bigger and will involve several banks, increasing risk, concern about systems integrity and customer impact.”

About Robert Lovell

Business and finance journalist

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    avatar
    15th Jan 2015 11:26

    Probably a time to change banks for me when it happens then!

    I have kept my business account with my current bank for the last 10 years purely because all of my clients pay me by standing order.  A change of bank would unfortunately entail me having to get new standing orders signed for the new bank account, and I could face a disruption in the monthly income I receive.  It is this that has prevented me from moving banks, even though I have been very dissatisfied with my bank for some time.

     

    If my bank changes my sort code, I will have no reason to stay with them and will move  – a shot in the foot for them then if this happens, as there may be others in the same boat as me.

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    15th Jan 2015 11:32

    Wouldn't it be easier for the banks to apply new sort codes to their newly hived-off investment arms, and keep the retail sort codes as they are ?

    This just smacks of the banks trying to deliberately make life awkward for the public (i.e. the taxpayers whose billions bailed them out) as a bit of petty revenge for having their nice cozy arrangements broken up.

    Thanks (4)
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    15th Jan 2015 11:41

    Unlikely to happen in my opinion

    I doubt this will actual take place, if it were any other industry problems may occur but banking? They will simply have a change in law made to enable them to transfer sort codes from one entity to another to support the restructure's, thus resolving several problems in one go.

    The alternative is to spend alot more public money on some convoluted scheme the goverment dreams up, in fact scratch my first comment it may happen after all and all our bank details will be passed to HMRC as part of the scheme.

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    15th Jan 2015 13:08

    Paid via HMRC

    Wasn't the HMRC route already in planning anyway?

    Following on from RTI I believed it was the long term intention to have payments into your account from the HMRC based on fps .....still doesn't resolve the sort code problem though.

     

    would anyone be able to say if there is a duplication of account numbers across different banks or even bank branches?

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    15th Jan 2015 11:46

    Account Switching?

    It's a shame that the government haven't created a system whereby the banks can also update all of the records that depend on these sort codes as well to make this a fairly trivial exercise.

    Some form of magical "account switching service". ;)

    Thanks (1)
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    By ringi
    15th Jan 2015 15:14

    It never works 100%

    MatthewSteeples wrote:

    It's a shame that the government haven't created a system whereby the banks can also update all of the records that depend on these sort codes as well to make this a fairly trivial exercise.

    Some form of magical "account switching service". ;)

    It never works 100%,  some customers will always get the details form a old bit of paper, or an old email.

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    15th Jan 2015 11:58

    Sort Code Format

    Is there anything to suggest that the format of the sort code will change from a nn-nn-nn format?

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    By coland
    15th Jan 2015 13:30

    Sort code

    NN-NN-NN-o thanks!

    This seems to stem from their former ridiculous idea to dispense with cheques. Hopefully the accounting and business world will shout this stupid proposal down too!

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    15th Jan 2015 16:18

    Already not working with Lloyds/TSB

    Dealing with a direct debit to be taken from my mother's, recently opened, account with TSB to pay the monthly care home fees.  The care home's bank can't process the direct debit because they say the bank name (TSB) and the sort code don't match.  The branch used to be Lloyds and still uses the same sort code.

    No-one seems to be able to sort this out.

    Care home keeps saying that we/I have given them incorrect information.

    Result is that, after 4 months there is still no dd in place and every month, when I have to pay the bill by a bank payment, I have the same discussion with the care home's financial manager trying to get her to instruct their bank to accept the dd request.

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    15th Jan 2015 18:03

    tsb/Lloyds
    I bank with Lloyds for business but all our personal accounts were transferred to TSB.

    I lost my debit card and phoned the TSB lost card people and she couldn't understand why but my sort code and account number were apparently NOT from that bank! And this WAS my bank.

    I mean in a moment of distress - how do you answer that one when on the phone.

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