Current account switching will be made easier later this year as banks will have to move all your direct debits and standing orders within a week, Chancellor George Osborne has confirmed.
However, he stopped short of ensuring consumers have one current account number they can take with them from bank to bank, similar to a mobile phone number that users take with them when switching telecoms firms.
The plans, to be enacted in September, should allow consumers to switch current accounts within seven days. They were already in the pipeline, but today's speech from Osborne rubber-stamps that proposal.
Martin Lewis, MoneySavingExpert.com creator, says: "Anything to speed up the process and make it easier to switch is a good thing.
"However, I still think until we have portable bank account numbers, like mobile numbers, customers will be put off, as the important thing is giving consumers confidence in the switching process.
"The ability to shift account so nothing else changes other than the service is the holy grail. I hope not to be proved right that this is an open goal missed."
Only last month, the Office of Fair Trading (OFT) said the current account switching process was too difficult (see the Switching accounts 'must be made easier' MSE News story).
According to Osborne (above, right), 75% of all personal current accounts are in the hands of just four companies.
Osborne said in a speech today: "From September this year, every customer of every bank in Britain will be able to switch their bank account from their existing bank to another one in seven days.
"All they will have to do is sign up to a new bank – and the rest will follow. All the direct debits, the standing orders, everything will be switched for you with no hassle. This is a revolution in customer choice."
The Independent Commission on Banking (ICB) called for for seven-day switching of current accounts in 2011 (see the ICB report MSE News story).
Osborne also said the Government wants to give consumers more choice by making it easier for new banks to enter the market and to challenge existing providers.
He added the Government will also "bring forward detailed proposals to open up the payment systems". In other words, this would allow customers and businesses to transfer money quicker.
Britain's biggest banks will also face sanctions if they flout new rules to ring-fence risky operations from savers' deposits.
Osborne published legislation, which he expects to be passed this time next year, to keep savers' money separate from banks' riskier investment businesses in case those investment units make a loss.
If banks don't stick to this, the Government will forcibly separate the two arms.
Osborne said: "2013 is the year when we reset our banking system. So the banks work for their customers – and not the other way round."
Additional reporting by the Press Association.