New sort codes warning in bank shake up
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.”