Financial transaction records can act as important evidence when securing a loan or mortgage, and U.K. banks are legally obliged to provide this information to customers so as to not create barriers to switching accounts providers.
To make the switching process as smooth as possible, Part 5 of the Retail Banking Market Investigation Order 2017 (the Order) requires all banks to provide departing business and personal account holders with a Payment Transaction History (PTH).
And to further help with the process, the Current Account Switching Service (CASS) has also been set up to automate account switching by redirecting all payment requests and direct debits.
Recently, the CASS reported a year-on-year rise in the volume of U.K. account holders using the service. The data revealed that the total number of switches increased by 32% compared with the year before to hit more than 850,000.
As British account holders migrate from bank to bank in search of more attractive rates and better features, the CASS data also revealed that NatWest, Nationwide, Starling, HSBC and Monzo have emerged as the top five most switched-to banks.
Related: Digital Banking App Provider Ranking Sees Two Contenders Join the Top 10
But despite being a net beneficiary of Brits’ growing preference for the current account switch’n’ditch, it hasn’t all been good news for one bank in the top five.
This week, the U.K.’s Competition and Markets Authority (CMA) issued legally binding directions to Monzo in light of its repeated failure to provide transaction history records to customers leaving the bank.
Although it had already been warned about breaches of the Order, Monzo notified the CMA in March 2022 that it failed to send PTHs to over 10,000 personal account holders in the 2021-2022 financial year. The bank blamed a coding error for the failure and was only alerted to the issue after a customer who closed their account failed to receive a PTH and queried this.
Read more: UK Competition Watchdog Issues Second Warning to Monzo Over Breach of Retail Banking Regulations
As a result, the CMA has issued directions requiring that Monzo ensures this doesn’t happen again, with the bank having to review its procedures with an independent body. The directions are enforceable in court if Monzo fails to comply.
In response to the CMA’s ongoing concerns, Monzo has set out some initial changes. These include introducing new auto-alerts to warn staff when the system fails to issue transaction histories and monitoring cases to ensure departing customers receive their transaction history.
Commenting on Monzo’s breaches of the Order, Adam Land, senior director at the CMA, said: “It’s simply not good enough for a major bank like Monzo to repeatedly fail its customers by not following clear rules.”
See also: Monzo Faces FCA Investigation Into Alleged AML Contraventions
Although reforming its existing processes to ensure legal compliance may create a short-term headache for Monzo, ultimately, banks’ legal obligation to provide PTHs is beneficial to the digital challenger as one of the winners of more seamless current account switching.
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