Bacs, CASS, current account switch service, Direct Debit
26, MAY 2017

Chances are, you will have seen the latest marketing campaigns run by the Current Account Switch Service (CASS), which is owned and managed by BACS. The availability of this ‘free to use’ scheme supports the banking population, both consumer and business, to move banks. This allows people and organisations to access banking services that better suit their requirements at any particular time. We look at the latest figures from the CASS and what they tell us, and look at the role of direct debit in contributing to the success of the scheme.

The Direct Debit revolution

It used to be that once you opened a bank account, that was it – you were a customer for life. Never mind that it was the only bank available in your area, or you went there because your parents banked there. With your account came a cheque book and a cheque guarantee card, perhaps a deposit book. To get cash, you cashed a cheque at the bank; to make payments, a cheque.

That all started to change in 1968 when BACS was created to improve the existing clearing system and reduce paperwork between banks. Direct debit was introduced in 1970 – but that idea of somehow automating a regular payment for an ongoing supply of a product or service was initially treated very much with scepticism.

Times have very much changed, with direct debit now being the most popular form of payment in the UK, and the payment form most people feel most comfortable with. 8 in 10 adults in the UK have at least one direct debit set up on their bank account, with people on average having about 5 direct debits set up to pay for everything from their TV services, their council tax and donations to charity. Last year, 2016, a truly astonishing 6.22 billion transactions were processed by BACS, worth almost £5 trillion. On Thursday 29 September 2016, 109.3 million payments were processed by BACS. These figures demonstrate clearly the importance of direct debit in our day to day lives.

Direct Debit’s role in the success of the CASS

With the opening up of the banking markets and increased competition, both consumers and businesses now have a wide range of options to choose from when it comes to banking. But as anyone who tried to change bank accounts before the CASS was in place will tell you, taking advantage of those alternative options involved the almost interminable red tape involved in closing down one account and opening up another account. Alongside this was the length of time the transfer would take and the anxiety that you would forget to set up a new direct debit or standing order and miss crucial payments.

Introduced in 2013, the Current Account Switch Service promised to change all that. 4 years on, it looks as if it is delivering on those promises, with over 3.7 million switches made since the service was launched, and a staggering 248,302 switches taking place in the first quarter of 2017.

The increased confidence in direct debit, as evidenced by the figures we mentioned earlier in this blog, have undoubtedly contributed to the success of the Current Account Switch Service. With direct debits in place, customers can be confident that their payment obligations will transfer seamlessly to the new bank. The advantages of setting up a direct debit in the first place are preserved, and alongside the direct debit guarantee, customers switching bank accounts benefit from the CASS guarantee too.

Maintaining trust in the direct debit scheme for the future

With direct debit contributing to the positive perception of the Current Account Switch Service – and indeed, with the UK’s CASS scheme being identified as world class we all have a role to play in supporting this and maintaining trust in the direct debit scheme. As a service user, there are a number of things you can do to support the direct debit scheme, including:

– make sure your staff are properly trained in the most up to date direct debit rules ,

– taking advice from a BACS approved direct debit bureau – for example if you are thinking of migrating to AUDDIS

Clear Direct Debit offers training, consultancy and practical support to organisations running direct debit schemes, at every stage of their direct debit journey. Why not get in touch and find out how we can help you?