Pay.UK have recently published research about the future of Current Account Switching and their predictions of increases will also mean an increase in ADDACS Reports.
Current Account Switching Service (CASS)
The Current Account Switching Service (CASS) was launched in 2013. Its aim was to help consumers and businesses make the most of their money by providing a secure and reliable way to move their current account. In the last 10 years since then, there have been over 8 million completed switches (amongst consumers and small or medium-sized businesses) using CASS. In 2022 alone there were 986,956 – an increase of 20% vs the prior year -and following research Pay.UK predict this number will grow further.
A number of factors have been identified as contributors to this including:
- Increase in young consumers who are less loyal to brands
- Automated switching services developing
- New FinTech’s and challenger banks competing
- Higher interest rates incentivising change
- The uptake of open banking and trend towards multi banking.
Future switching trends
Research was completed between September and November 2022. Using a mixed-method approach, the research collected the views of consumers, industry experts and SMEs. There were 23 trends identified, grouped into 5 broad categories that would impact the future of current account switching:
- Changing structure of society
- Technology transformation
- Industry competition
- Regulatory initiatives
- Economic uncertainty
It was predicted that a few of these trends could result in a decrease in switching. For example, one of these, grouped under ‘Changing Structure of Society’ was the ‘Data Privacy Paradox’. This trend identified that concerns about how organisations collect, manage and use personal data could make it difficult for financial providers to target offers to consumers.
It was predicted however that most identified trends would increase the current account switching rate (see the Pay.UK findings).
What does Current Account Switching mean for Direct Debits?
When a payer switches their bank account it triggers an ADDACS notification to inform a service user about the change. ADDACS stands for the ‘Advice of Direct Debit Amendments and Cancellations’ report. These reports advise service users about changes that affect the underlying Direct Debit Authority. Current Account Switching and ADDACs are linked. Any increases in Current Account Switching – and ADDACS reports will also increase!
ADDACS Reports
Service Users have a responsibility to action their ADDACS reports “immediately or within 3 working days”. They should update the payers details in their CRM and/or Direct Debit database. Where they are provided with the new account details, they must lodge a new authority on the new account. Typically this is done by sending an AUDDIS instruction with the code to create the new authority. If Service Users do not take these actions, and continue to try and collect using old details – even after being notified about the current account switch – it will prompt communication from Bacs advising that Bacs Reports have been missed.
If a service user has a large number of payers they are collecting from, it is possible that lots of ADDACS reports are generated. As they are prompted by actions undertaken by the payer they can arrive at any time that the payer undertakes the current account switch. Each service user should therefore:
- have a process in place to identify and action these reports in order to keep their database as ‘clean’ as possible,
- ensure that staff are trained and understand what the reports show and how to respond.
Questions?
If you have any concerns about the process in place to manage ADDACS reports, or want to know more about what ADDACs show and what response you should take, please see our website or contact us today.
You can read more details about the research undertaken by Pay.UK on their website