Around one million customers will have their sort codes changed by 2019 in a bid to prevent another financial crisis
THERE has been confusion over the new sort code changes that are currently underway, with some banks telling customers to update their employers with their new code or risk delayed payments.
Across the five major UK banks, around one million customers will have their sort codes changed by 2019, in a bid to make the financial system safer and to prevent another financial crisis.
Banks have reassured customers that if they get a new code, they won’t have to alter any direct debits, standing orders or incoming payments as this will be taken care of by the bank.
But HSBC has advised the “small proportion” of its customers that will get a new sort code, to tell their employer about their new details to ensure that payments aren’t delayed.
This has caused confusion among customers who are unsure whether they need to update their employer on the changes or not.
Banks, including HSBC, say that customers don’t have to do anything and their old sort codes will continue to work for three years after they receive the new one – meaning that all incoming and outgoing payments will be redirected to ensure payments reach the right account.
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But it is being recommended that people give their employers their new sort code to ensure payments are made on time.
HSBC documentation states: “Unfortunately, we cannot rely on redirection forever so account details used by the payer will need to be updated.”
A spokesperson for the bank said: “HSBC is committed to making this process as straightforward as possible for the small proportion of customers impacted.
They added: “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.”
Sort codes are six digit numbers which identify both the bank and the branch where an account is held.
Speaking to the British Bankers Association, Bank of England director James Proudman said that under the 2013 Banking Reform Act, UK banks are required to separate their high street bank services from riskier parts of the business, such as investment banking, by January 2019.
This “ring-fencing” aims to “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,” he said.
The legislation mostly affects the UK’s five biggest banks, and doesn’t impact building societies – such as Nationwide – or banks with less than £25 billion of deposits.
Barclays said it would change people’s sort codes “in batches” and will start in the second half of the year.
A spokesperson said: “Customers impacted will be informed ahead of time and there will be no interruption to their banking.”
Retail customers of Santander, Lloyds Bank, Halifax and Bank of Scotland won’t be affected by the change. The Sun Online has contacted Royal Bank of Scotland for comment.
IS YOUR SORT CODE CHANGING?
AROUND one million customers will have their sort code changed by 2019 under new rules.
The changes mostly affect HSBC and Barlcays customers, and Santander, Lloyds Bank, Halifax and Bank of Scotland said its customers wouldn’t be affected.
Banks have already written to, or will write to, the customers who will have their sort code changed, and customers are being reassured that they don’t have to do anything.
But it’s recommended that if you have your sort code changed, you tell your employer so that they have the most up-to-date information.
If you get your new sort code and need to set up a new PAYE, you should also use your new details, but if you forget then that’s fine – as old sort codes will continue to work for three years.
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