PART 1: SERVICE OVERVIEW

Transcription

1 PART 1: SERVICE OVERVIEW VERSION January 2017

2 CONTENTS 1 DOCUMENT INFORMATION VERSION HISTORY REFERENCES COPYRIGHT STATEMENT 5 2 INTRODUCTION SERVICE OBJECTIVE ASSD DOCUMENT SET OVERVIEW 6 3 SCOPE ITEMS IN SCOPE FOR ACCOUNT SWITCHING SERVICE OUT OF SCOPE ITEMS FOR ACCOUNT SWITCHING SERVICE 8 4 OVERVIEW FULL AND PARTIAL ACCOUNT SWITCHING PARTICIPATING INSTITUTIONS PARTICIPATING ACCOUNTS PARTICIPATING PAYMENT SCHEMES/SERVICES LIABILITY INTERBANK COMMUNICATIONS TRANSFER OF PAYMENT ARRANGEMENTS TRANSFER OF FUTURE DATED PAYMENTS REDIRECTION OF ELECTRONIC PAYMENTS AND AUTOMATED COLLECTIONS DEBIT CARD TRANSACTIONS BALANCE TRANSFER PROCESSING OF CHEQUES TRANSACTION FORWARDING 18 2 VERSION JANUARY 2017

3 CUSTOMER COMMUNICATIONS AUDIT TRAIL MANAGEMENT INFORMATION 20 5 SWITCHING CONTRACTS AND SERVICE RULES CUSTOMER FACING CONTRACT SERVICE RULES 22 6 HIGH LEVEL PROCESSES AND SERVICE CONTEXT HIGH LEVEL PROCESS AND TIMELINE (FULL SWITCH) SERVICE PAYMENTS CONTEXT 24 3 VERSION JANUARY 2017

4 1 DOCUMENT INFORMATION 1.1 VERSION HISTORY VERSION DATE DESCRIPTION Aug 2011 Baseline release to support the Business Case Oct 2011 For issue to members Nov 2011 For reissue to members, updated following member feedback Dec 2011 For reissue to members, updated following member feedback and issue resolution Feb 2012 For sign off. Incorporates review comments on V Apr 2012 Incorporates RFC004, RFC005, RFC006, RFC007, RFC Jul 2012 Incorporates change requests approved since V Oct 2012 Incorporates change requests approved since V Apr 2013 Incorporates change requests approved since V Aug 2014 Split the former ASSD into 4 separate Bacs documents of which this is the Part 1. Draft for participant review Oct 2014 Revisions incorporated. Issued for final approval Oct 2014 Baseline version Sep 2015 Updated to include 2014 Autumn Budget Statement Include extended eligibility criteria Remove references to ToDDaSO Dec 2015 Baseline version Dec 2016 Draft for participant review of 2016 updates Jan 2017 The approved version containing the 2016 updates will be issued as V6.0 Main changes impacting this volume are: Alignment between sections common to the ASSD and G&R Indefinite redirection (CASS MC, Dec 2015) Use of card scheme updater service is optional (CASS MC, Oct 2016). 1.2 REFERENCES REF TITLE VERSION DATE 001 C&CCC Account Switching Cheque Redirection Service Definition Feb FPS Account Switching Business Requirements Feb CHAPS Procedures Jun ASSD Part 2: Participant Requirements Jan VERSION JANUARY 2017

5 REF TITLE VERSION DATE 005 ASSD Part 3: Message Requirements Jan ASSD Part 4: Central Requirements Jan Guide and Rules to the Bacs Account Switching Service Jan COPYRIGHT STATEMENT Confidentiality All rights reserved. The copyright in this document is owned by Bacs Payment Schemes Limited (short formed as Bacs). All material, concepts and ideas detailed in this document are confidential to Bacs. This document shall not be used, disclosed or copied in whole or in part for any purposes unless specifically approved by Bacs.. 5 VERSION JANUARY 2017

6 2 INTRODUCTION 2.1 SERVICE OBJECTIVE The objective of the Account Switching Service is to provide a robust service that enables personal, business (Small or Medium Enterprises (SMEs), charity and trust banking customers to fully switch their current account seamlessly from one bank to another in seven working days (a Full Account Switch). The accounts covered by this service are UK Sterling current accounts including personal and business current accounts. As part of the account switch, the service will manage the transfer of payment arrangements from the customer s old account to the new account. The payment arrangements that will be transferred include Standing Order mandates, bill payment arrangements, internal transfers and Direct Debit Instructions. The account switch will also transfer future dated payments with a due date that is later than the date for the completion of the switch (the switch date). The service will specify the actions that the affected party must perform to operate the service, but not the tasks required to open the new account or close the old account involved in the switch. The Account Switching Service will also support an account switching process that provides a partial switch service. This enables: Switches to take place on some account types that are not covered by the full account switching service The selection of individual payment arrangements between accounts, But the service does not contain some of the features of the full service such as automated redirection and guarantees on the timescales in which the switch will take place. The Current Account Switch Service (i.e. the full switch service) has been designated by the Payment Systems Regulator as an alternative switching service under the terms of the Payment Accounts Regulations (PARs). 2.2 ASSD DOCUMENT SET OVERVIEW The (ASSD) comprises 4 separate documents: Part 1: Service Overview (ASSD1, this document) which provides an overview of the service and defines the service scope Part 2: Participant Requirements (ASSD2 [Ref 004]) which defines the account switching process, and participant requirements Part 3: Message Requirements (ASSD3 [Ref 005]) which defines the interbank message requirements for automated participants. Part 4: Central Requirements (ASSD4 [Ref 006]) which defines the central requirements. The glossary for the ASSD document set is in Appendix C of ASSD2 [Ref 004]. A companion document to the ASSD document set is the Guide & Rules [Ref 007]. Other relevant documents that may be of interest to participants are listed in the Introduction to ASSD2 [Ref 004]. 6 VERSION JANUARY 2017

7 3 SCOPE The Account Switching Service will support: A full seven working day guaranteed account switch service A partial account switch service, without a seven working day guarantee It will be delivered through a set of robust processes that define the sequence of actions that all parties to an account switch must perform. These processes will be used to: Manage communication with the customer Manage and effect the transfer of information between the new bank and old bank. Manage and effect the transfer of information between all participants involved in the processing of payment instructions that are associated with the account that is switched. Manage and control the cancellation of payment arrangements on the old account to coincide with commencement of payment responsibility by the new bank. For full account switches, manage and control the redirection and forwarding of payment and collection transactions that continue to reference the old account following the account switch. FPS Payments and Bacs Direct Credit payments and Direct Debit collection transactions will be redirected to the new account. For full account switches, manage the transfer of funds between the old and new account to transfer the closing balance from the old bank For full account switches, manage the transfer of funds between the new and old account where the new bank has agreed to pay off all, or some, of a negative balance on the old account on the switch date, if the account is overdrawn. 3.1 ITEMS IN SCOPE FOR ACCOUNT SWITCHING SERVICE The items deemed to be in scope for the definition of the Account Switching Service are: Full and partial account switches Participating institutions (described in section 4.1.2) Participating accounts (including basic and children s accounts described in section 4.1.3) Interbank communications Transfer of regular payment arrangements - Direct Debit instructions, Standing Order mandates Transfer of regular internal payment instructions - where a payment mandate is held by the old bank (full switch only) Transfer of bill payment arrangements Transfer of future dated payments (full switch only) Cancellation of Standing Order mandates and Direct Debit instructions Transfer of balance or funding amount on last working day of switch using either FPS or CHAPS payment(s) (full switch only) Switches between bank accounts operated inside of the United Kingdom (i.e. England, Scotland, Wales and Northern Ireland), the Channel Islands and the Isle of Man. The automatic central redirection of (full switch only) - Direct Credit Payment transactions processed via Bacs - Direct Debit Instructions processed via Bacs 7 VERSION JANUARY 2017

8 - Direct Debit collection transactions processed via Bacs - Payment Requests processed via FPS The forwarding of debit card transactions, refunds and chargebacks (full switch only) The forwarding of CHAPS payments (full switch only) The forwarding of SEPA Credit Transfer (SCT) payments as Euro payments (full switch only), except where the old bank is acting as an agency bank for the processing of cross border payments that credit the old account in which case it is permissible for the payment to be forwarded in currency or in sterling The forwarding of other currency transactions in the original currency as received by the old bank (full switch only), except where the old bank is acting as an agency bank for the processing of cross border payments that credit the old account in which case it is permissible for the payment to be forwarded in currency or in sterling Credit and debit transaction forwarding (full switch only) Settlement of debit card transactions (full switch only) Cheque Redirection Service (full switch only) Old bank Paym de-registration (manual or automated), where applicable (full switch only) Customer Paym registration at the new bank, where applicable (full switch only) Customer Communications Access to the Account Switching Service Management Information and reporting Pro forma process defining actions required to repatriate an account Participating banks must comply with all applicable UK and EU laws and regulations which may include, (but is not limited to) The Payment Services Regulations 2009 (including subsequent revisions) and to the extent applicable to any particular Participant, rules and guidance of the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) and the Competition Remedies in Northern Ireland. 3.2 OUT OF SCOPE ITEMS FOR ACCOUNT SWITCHING SERVICE The items that are currently considered to be out of scope for the service are: The process for opening the new account including the Know Your Customer (KYC) related requirements. The new bank is however required to provide an agreed set of data within the Information Request message to the old bank for it to use to validate the account and account parties The process the new bank uses to capture the account switch request from the customer. Customer service channels provided by old and new bank. The development that individual participants including banks, originators, payers and service providers might have to undertake. The wholesale use of the service to migrate accounts from one brand to another or from one sort code to another. Any service participant with specific operational requirements must discuss them with Bacs in order to avoid adversely impacting the account switching service or the payment schemes. The switch of accounts not classed as a current account (for full switch only). The switch of Euro and other currency accounts. 8 VERSION JANUARY 2017

9 The switch of any account linked to the account being switched. Secured lending (i.e. accounts with security/collateral attached) (for full switch only). Centrally automated Paym de-registration from the old bank, where applicable (for full switch only) Centrally automated Paym registration to the new bank, where applicable (for full switch only). Account product features such as: - Overdraft facilities (always subject to eligibility) - Automatic transaction forwarding between two accounts internal to the same bank - Money management facilities such as mobile banking alerts - Fulfilment and timeline for debit card and cheque book issuing. The use of Roll Numbers in any Account Switching Service message. Any personal account switch where an account party for the old account is not an account party for the new account (e.g. a joint to sole account switch). Any full switch between accounts held by a trust or partnership where an account owner of the old account is not an account owner of the new account. Switches from bank accounts operated outside of the United Kingdom (i.e. England, Scotland, Wales and Northern Ireland), the Channel Islands and the Isle of Man. Switches to bank accounts operated outside of the United Kingdom (i.e. England, Scotland, Wales and Northern Ireland), the Channel Islands, and the Isle of Man. Switches between accounts operated outside of the United Kingdom (i.e. England, Scotland, Wales and Northern Ireland), the Channel Islands and the Isle of Man. The transfer of international or non-sterling recurring mandates. The automatic central redirection of any payment instruction not explicitly identified as being in scope in section 3.1) The collection and recovery procedures employed by the old bank. The transfer of payment arrangements in which the originating and beneficiary account are not identified using a sort code and account number. This includes mandates for SCT or other cross border payments. The forwarding of foreign cheques. For foreign cheques, the switched account will be treated as closed account and the old bank will use BAU procedures. The forwarding of domestic cheques drawn in a foreign currency. For domestic cheques drawn in a foreign currency, the switched account will be treated as closed account and the old bank will use BAU procedures for handling the cheque The Bulk Payment Redirection Service (BPRS). 9 VERSION JANUARY 2017

10 4 OVERVIEW FULL AND PARTIAL ACCOUNT SWITCHING The Account Switching Service provides the central functions required to support the guaranteed switch of a customer s account and the transfer of payments arrangements associated with the account from one payment institution to another payment institution in seven working days. Payment institutions may use some of the central functions to provide a partial account switch that is not covered by the guarantee. The table below shows the functions of the full switch and those that may be used to provide a partial switch service when a payment institution does offer a partial switch service. SERVICE FUNCTION FULL ACCOUNT SWITCH PARTIAL ACCOUNT SWITCH Request account switch Mandated Mandated Transfer all payment arrangements Mandated Possible Transfer selected payment arrangements Not possible Yes, as required Set up transaction redirection Mandated Not possible Initiate payment arrangements cancellation Not required Yes, as required Automated transfer of closing balance Mandated Not possible Automated closing of old account Mandated Not possible Complete switch Mandated Yes, as required Redirection & forwarding Mandated Not possible Table 1: Functions For Full and Partial Account Switch The scope and timing of a partial switch service will be affected by the need for an additional interaction between the new payment institution and the customer and is not covered by the seven working day switch guarantee. Payment redirection cannot form any part of a partial switch because the payment redirection services will not support the selective redirection of payments by originator or beneficiary PARTICIPATING INSTITUTIONS The institutions that are in scope and that the Account Switching service must be able to support in the execution of an account switch include: All payment institutions offering Sterling current accounts (as described in section 4.1.3) in the United Kingdom of Great Britain and Northern Ireland and including the Channel Islands and the Isle of Man that are accessible for FPS or CHAPS payments. Service Users and banks processing Direct Debit collections that debit the customer account. Service Users and banks processing Credit transfers that credit the customer account. Financial Institutions that submit individual payments to FPS. Financial Institutions that submit files of payments directly to FPS using FIM. Financial institutions that submit CHAPS payments Financial institutions that submit SEPA CT payments 10 VERSION JANUARY 2017

11 Corporates that submit files of payments directly to FPS using DCA. Entities that use bank systems to send payments Entities that process cheques for participating banks Card acquirers that provide card acceptance to merchants Merchants that process debit card transactions against the current account. Payment institutions that participate in the Account Switching Service will do so directly or will use a bureau that participates directly with the service. Payment Institutions that participate in the Account Switching Service and which are not Bacs members will require a Service User Number registered with a Bacs member. The Account Switching Service will support participating institutions that hold: A Full and Partial Account Switching licence enabling the bank to operate full and partial account switches, or A Partial Only Account Switching licence enabling the bank to operate partial account switches. The Account Switching Service will support the on-boarding of new users from the start of its operation. When the service was launched in September 2013 all Payment Council members offering current accounts were mandated to join. Although the Payments Council no longer exists this requirement remains in force PARTICIPATING ACCOUNTS The accounts that are supported by the full seven working day guaranteed account switching service and the partial switch service include Sterling current accounts for customers that are either: A consumer (including basic and children s accounts) An SME with an annual turnover and/or balance sheet total that does not exceed 6.5 million and employs fewer than 50 people. This definition comes from the banking reform proposals for ring-fencing and it meets the 99% SME threshold requirement in the 2014 Chancellor s Autumn Statement (as validated by government produced statistics). A small charity with an annual income of less than 6.5 million. A small trust with a net asset value of less than 6.5 million For CASS a sterling current account is an account with sterling (GBP) as the account currency which provides the facility to receive and make payments using payment instruments such as cheques, debit cards, Direct Debits and Standing Orders and use ATMs and make regular payments. The partial switch service will support current accounts for larger corporate customers and other account types in addition to those defined above. The service will support the full switch of a current account from one Payment Institution to another current account at another Payment Institution. It will support an account switch from: Sole account to sole account Sole account to joint account Joint account to joint account 11 VERSION JANUARY 2017

12 For sole to sole, and joint to joint, switches of personal current accounts, the same account holder(s) must be named for both the old account and the new account. The rule is that for switches of personal current accounts, the account parties for the old account must be included as account parties for the new account. In a sole to joint switch, the new account will have an additional party. For switches of business, charity or trust accounts, the account parties authorising the account switch must match those with appropriate authority on the old account mandate. In addition, for switches where the account is held by a partnership or a trust, the account parties identified as the account owners for the old account must be the same as those identified as the account owners for the new account. These restrictions have been applied to reduce the risk of processing fraudulent account switch requests. The new account must be enabled (an enabled account is open and able to accept credit and debit payment transactions) before the switch service can be invoked. Both the old and the new account must be accessible for credits and debits via FPS or CHAPS. The accounts must be accessible using a sort code and account number (the use of roll numbers is not supported) PARTICIPATING PAYMENT SCHEMES/SERVICES The payment schemes that provide central services that explicitly support the Account Switching Service are: Bacs which provides services that include: - The interbank messaging used to manage the account switch between the old bank and the new bank - The central redirection of Bacs Direct Credit payment transactions - The central redirection of Direct Debit Instructions - The central redirection of Direct Debit collection transactions FPS which provides central redirection of single FPS payment requests Cheque & Credit Clearing which specifies the cheque processing rules for cheques drawn on the old and new accounts in Great Britain BBCC (Belfast Bankers Clearing Company) which specifies the cheque processing rules for cheques drawn on old and new accounts in Northern Ireland CHAPS Company which specifies the CHAPS forwarding rules [Ref 003] The card schemes (Visa and MasterCard) which provide merchant updater services that are enhanced to support the account switch. Paym which allows customers to securely send and receive money to their current account using a mobile number. It works by linking mobile number and current account. When switching accounts between Paym providers, mobile numbers must be de-registered by the old bank. Subsequent registration with the new bank is performed on customer request LIABILITY The new bank is responsible for performing the know your customer (KYC) and other customer due diligence checks that are specified in its policies and in regulations in order to validate and verify the 12 VERSION JANUARY 2017

13 identity of the customer and ascertain relevant information pertinent to doing financial business with them as part of the account opening process. The new bank is required to provide an agreed set of data to the old bank for it to use to validate the account and account parties. Based on this, liability resulting from the fraudulent switch of account will rest with the new bank. The old bank is required to validate the data provided by the new bank against the data it holds for the old account. If the old account does not meet the criteria for switching, or the data fails validation or verification, it must reject the switch request. High risk triggers flagged by the old bank will also cause the switch request to be rejected. Where data is not held by the old bank, each instance will be reported to the new bank as a warning. Liability may be transferred to the old bank if it fails to perform the specified validations and provide the results of the validation to the new bank. However for the avoidance of doubt the new bank is solely responsible for upholding the Current Account Switch Guarantee and must honour it in all respects ensuring the customer is not directed to the old bank for any issue raised under the Guarantee. In the event the old bank is at fault the new bank will not use this to delay fulfilling their obligations to their new customer under the Guarantee. The liability model is described in the Account Switching Service Participation Agreement INTERBANK COMMUNICATIONS The Account Switching Service provides a set of interbank messages that are used to initiate and coordinate the account switch process between the new bank, the Account Switching Service and the old bank. These messages are: A request for information sent from the new bank providing sufficient information for the old bank to identify the old account and validate the account parties, to inform the old bank of the maximum funding the new account will provide to settle a negative closing balance and the proposed balance transfer window. A response sent from the old bank that either confirms the old account exists, has been verified and has a status that enables it to be switched or identifies that the old account cannot be identified or has a status that prevents a switch (e.g. account holder deceased, suspected or actual fraud or legal reasons associated with the old account Ts & Cs). If the account is successfully verified and may be switched, this message will also include: - The details of Standing Orders to be transferred to the new account from the old bank. - The details of live Direct Debit Instructions (DDI) lodged against the old account to be transferred to the new account from the old bank. A live Direct Debit Instruction is one that is not expired, has not been cancelled by any party or become dormant as a result of the dormancy period. - The details of bill payment arrangements to be transferred to the new account from the old bank. - Information identifying payment arrangements that cannot be transferred (e.g. offset and other payments mandated in the old account Ts & Cs). - The details of future dated payments with a due date that is later than the switch date (for full switch only). 13 VERSION JANUARY 2017

14 - Information that describes the validation checks that the old bank completed and the result to provide positive confirmation that all individual field validation checks have been carried out. - Confirmation of the balance transfer window. For partial account switches, a request sent from the new bank to the old bank advising the old bank to cancel the Direct Debit Instructions and Standing Order mandates at the appropriate time. For full account switches, a request sent from the new bank to the Account Switching Service to request that transaction redirection is set up For full account switches, a request sent from the new bank to the old bank to transfer the closing balance, close the account and initiate the daily transaction forwarding of any credits and debits that have not been redirected and are received on the closed account. The message also includes the maximum funding the new account will provide to settle a negative closing balance For full account switches, a response from the old bank confirming the status of the old account, the amount of the closing balance transfer for credit balances and providing the detail of any negative closing balance for the account. For full account switches, a request may be sent from the old bank to the new bank to request payment for debit transactions that the old bank is obliged to accept under scheme rules (e.g. debit card settlements). The new bank will respond with a pay/no-pay decision. During the design of the Current Account Switch Service, MasterCard and Visa both confirmed the acceptability of passing (within the initial request for information) and using the last 5 PAN (Primary Account Number) digits (of an account party's debit card) for the purpose of account party verification, and that this does not have PCI DSS (Payment Card Industry Data Security Standard) implications. In addition to the set of interbank messages provided by the Account Switching Service there are a number of payments that will be made as part of the full account switch. These include: The transfer of the amount of cleared funds portion of the closing balance transfer (distinguishing between cleared and uncleared funds). The forwarding of transactions that credit the old account after the account switch has completed (from the end of the switch date). The payment to transfer funds to the old bank for transactions that the old bank is obliged to accept under scheme rules and that debit the old account after the account switch has completed (from the end of the switch date) subject to authorisation from the new bank. These payments will be made in response to a request for payment sent by the old bank TRANSFER OF PAYMENT ARRANGEMENTS The Account Switching Service will support the transfer of payment arrangements associated with the old account to the new account and the issue of the advices that are required to notify affected parties of the transfer. The payment arrangements to be transferred include: Direct Debit Instructions Standing Order mandates 14 VERSION JANUARY 2017

15 Regular internal payment instructions (where payment mandate is held by the old bank) which will be transferred as either a Direct Debit Instruction or a Standing Order mandate Domestic bill payment arrangements TRANSFER OF FUTURE DATED PAYMENTS In addition to the arrangements listed above, the Account Switching Service will support the transfer of future dated payments (for full account switches only) that debit the old account and have a due date that is later than the switch date REDIRECTION OF ELECTRONIC PAYMENTS AND AUTOMATED COLLECTIONS As part of a full account switch certain payment instructions that reference the old account will be redirected following the completion of the switch. These redirections will support: The redirection to the new account of payment and collection requests that are made to the old account. The payment instructions that will be centrally redirected are: - Bacs Direct Debit collections that reference the old account as the payers account. - Bacs Direct Credit transactions that reference the old account as the destination account. - FPS credit transactions that reference the old account as the beneficiary account. The redirection of AUDDIS Direct Debit Instructions (0N and 0S ) sent by service users that reference the old account as the payers account. The redirection service will support cascaded account redirections to support the scenario in which the customer switches accounts again, while redirections are still in force for the previous switch. Redirection will operate for a minimum period of thirty-six calendar months (and longer if required) following the completion of the switch, to provide time for affected counter parties to update the account data that they hold. The (same) redirection period applies to both Bacs and FPS i.e. it is not possible for Bacs to have a different redirection period to FPS. Transactions that would credit or debit the old account that are processed after redirection is no longer active will be returned, rejected or dealt with as a bank to bank issue in line with standard BAU processes following closure of a bank account. NOTIFICATION OF ACCOUNT SWITCH TO BACS SERVICE USERS In addition to redirecting Bacs payments and collections that reference an account for which a redirection has been setup, the redirection service will generate advices to be routed to the originator of the redirected payment or collection. These advices will include: An ADDACS advice (reason code 3) to the originator of the Direct Debit Instruction for any Direct Debit Instruction that has had to be redirected An ADDACS advice (reason code 3) to the originator of the Direct Debit collection for any Direct Debit collection that has had to be redirected An AWACS advice (C service, reason code 3) to the originator of the credit transfer for any Bacs Direct Credit that has had to be redirected. 15 VERSION JANUARY 2017

16 NOTIFICATION OF ACCOUNT SWITCH TO FPS ORIGINATORS In addition to redirecting FPS payments that reference an account for which a redirection has been setup, FPS will provide new data that will be used to advise the originator of new account details used in the redirection. Notification to originators for transactions that are processed as single payment requests by the originator s bank will be managed by the originator s bank using information returned to it in the payment response issued by the FPS central infrastructure. Banks or corporates that use the file based services offered by FPS (DCA and FIM) will be advised of redirections through the use of extensions to reports that are already generated by those services NOTIFICATION OF ACCOUNT SWITCH TO CHAPS AND INTERNATIONAL PAYMENTS ORIGINATORS When an old bank forwards a CHAPS payment or an International payment (including SEPA Credit Transfer or SWIFT MT103) it will issue a notification to the originating institution that the payment transaction has been forwarded wherever possible. The purpose of the notification is to advise the originating institution that the funds have been forwarded to the beneficiary s new bank account because the beneficiary s old account has been switched DEBIT CARD TRANSACTIONS Under card scheme rules, the old bank as the card issuer, must settle debit card transactions that are made using the old debit card. When the old bank has to settle a transaction after the account switch has completed (after the switch date) and no authorisation hold has been applied the old bank will make a request to the new bank for payment of the settled amount from the new account. Subject to funds being available and any other constraints the new bank will make payment to the old bank. Any credit or refund to the old account will be forwarded using the process described in section The old bank may use a number of approaches to minimise the number of transactions that need to be handled using this approach. These include: The optional use of script to update the card chip Lower Consecutive Offline Limit (LCOL) and Upper Consecutive Offline Limit (UCOL) settings to force online authorisation. The optional use of script to cancel the card. Declining all online authorisation requests received by the old bank following closing balance transfer. The new bank will optionally provide data to the Visa Account Updater (VAU) or MasterCard Automated Billing Updater (ABU) tables for merchants performing recurring transactions to use. The value of the closing balance transferred on the switch date will be reduced by the value of any authorised transaction for which settlement has not yet been made. 16 VERSION JANUARY 2017

17 BALANCE TRANSFER The account switching service will provide the process and mechanisms for the transfer of the old account closing balance as part of the full account switch. The service will provide interbank messages to control the balance transfer process and will support: The transfer of a positive closing balance from the old account to the new account. The transfer of funds from the new account to the old bank to settle a negative closing balance up to a limit agreed between the customer and the new bank which is communicated to the old bank. If the negative closing balance amount is greater than the limit that has been specified, the new bank will make a payment to transfer the amount specified for the limit. The transfer of the closing balance will be made using FPS or CHAPS payments PROCESSING OF CHEQUES Cheques paid into an old account ( cheques in ) are dealt with by means of Transaction Forwarding. The Cheque Redirection Service has been developed by the Cheque and Credit Clearing Company (C&CCC) for use by licensed account switching service users when processing cheques drawn on the old account that has been presented for payment ("cheques out") following completion of the switch. Any cheque that is drawn on the old account and presented after the account switch has been completed (after the switch date) will be returned to the collecting bank using a new unpaid return reason code Account switched. The old bank will provide the details of the most recent new account to the collecting bank when it returns the cheque. The old bank will identify the most recent new account details by querying the Account Switch Web site or the daily redirection extract. The collecting bank will advise the beneficiary that the promise has been stopped and restarted. It will then present the cheque to the new bank using an interbank memorandum. On receipt of the memo and cheque the new bank will decide whether to pay or not to pay the cheque. If paid, settlement will occur between the collecting bank and the new bank. If unpaid the new bank will return the cheque to the collecting bank. The Cheque Redirection Service will operate for the same duration that redirection is active following completion of the account switch. Full details of the Cheque Redirection Service will be found in the C&CCC Account Switching Cheque Redirection Service Definition [Ref 001]. PROCESSING OF STOPPED CHEQUES For stops applied to the old account prior to the account being switched, the old bank is responsible for checking for stops on its system. Where the old bank has the full/ sufficient information about the stop on their system (e.g. payee name, date, amount and full codeline details) the process will be: 1. The old bank will return the cheque payment stopped to the collecting bank. 2. The old bank will not provide the details of the new account to the collecting bank. 17 VERSION JANUARY 2017

18 3. The collecting bank will not attempt to forward the cheque to a new bank but will advise the beneficiary. 4. The payer and the payee will liaise directly to arrange alternative payment. Some banks operate a system whereby they accept stop payment instructions but the customer is unable to supply full details of the cheque to be stopped. In these circumstances the old bank has the option to apply a new unpaid return reason, using the following the process: 1. The old bank may choose to return the cheque to the collecting bank marked account switched potential stop. 2. The old bank must provide the details of the new account to the collecting bank. 3. The collecting bank will present the cheque, which is marked account switched- potential stop, to the new bank on a memo designed specifically for this purpose. 4. The new bank follows its BAU process to determine whether it will pay the cheque or not, consulting with their customer as appropriate. Where there is a potential stop on the cheque, the old bank is responsible for notifying the new bank that there is a potential stop on the item but the new bank retains liability for the pay/ no pay decision. If the old bank has received and accepted an instruction to stop payment of a cheque and fails to comply with its customer s instruction to stop payment of the cheque the old bank will be liable to the switched customer for paying the cheque inadvertently. If the switched customer wishes to place new stops on cheques from the old account after the account has been switched, the customer will advise the new bank. If the new bank fails to return a cheque payment stopped when it has been advised of new stop information by the customer, the new bank will be liable to the switched customer. The switching customer will not be permitted to remove or amend stops already placed on old account cheques prior to the switch TRANSACTION FORWARDING The account switching service will provide the processes and mechanisms required to move funds between the old account and the new account following completion of the switch. These are: The forwarding of any payment that would credit the old account which is accepted by the old bank and cleared. The transaction forwarding process will generate a payment (credit) from the old bank to the new account for each transaction and must contain the reference from the original payment so that the customer may reconcile the payments. A request for payment for a specific transaction that would debit the old account which is accepted by the old bank and cleared. The request for payment is sent to the new bank which will make a payment debiting the new account and crediting the old bank if the request meets conditions set by the Account Switching Service. The forwarding of the value of any paper credits backed by cheques ( cheques in ) or cash (i.e. giro credits) paid into the old account on to the new account on an individual basis once they are deemed to be cleared. 18 VERSION JANUARY 2017

19 The forwarding of CHAPS payment where the beneficiary account for the payment is the old account. The forwarding of SEPA Credit Transfer payment or other International payment where the beneficiary account for the payment is the old account. The forwarding of a residual balance that may result from the retention of funds from a payment to credit the old account received by the old bank that is used to reduce an outstanding debit balance. Transaction forwarding will operate for the same duration that redirection is active following completion of the account switch and transactions will be forwarded to the most recent new account. Transactions that would credit or debit the old account after the forwarding period has expired will be returned, rejected or dealt with as a bank to bank issue in line with standard BAU processes following the closure of the old account. The method of payment should be electronic using FPS where possible. A CHAPS payment may be used if the payment amount is greater than the limit imposed by the old bank for FPS transactions, greater than FPS scheme limits, if a bank is not accessible for FPS payments or if the payment to be forwarded was a CHAPS payment CUSTOMER COMMUNICATIONS The first communication from the customer is the customer s request to switch accounts. The new bank will explain the detail of the switch service and the associated terms and conditions to the customer and agree details such as the switch date and any funds (including agreed overdraft on the new account) which may be used to settle a negative closing balance on the old account. The customer will complete a switch request with the new bank. In this, the customer will be required to: Agree an account switch contract for the full seven working day guaranteed account switch. This contract will define the commitment made by the new bank to the customer for the execution of the account switch. It will include the date, agreed with the customer, on which the account switch is to take place (the last day of the seven working day account switch). Provide the details of the old account and the data required by the old bank to validate the customer or account party (account holder or authorised officers as appropriate). Provide specific authority for the account switch from the account parties as specified in the old bank mandate. The new bank will: Provide the customer with confirmation of the start of the switching process and a confirmed switch date. It may provide a list of the payment arrangements that are to be transferred to the new account. Notify the customer of key service events such as any delay and the completion of the account switch process. The new bank should explain what payments may be made to and from the old account and the timing and information for payments redirected or forwarded to the new account. 19 VERSION JANUARY 2017

20 The old bank will attempt to communicate with the customer to notify them that the bank has received and is processing a request to switch accounts. Any such communication must not delay the account switch process. The new bank may agree with the customer the maximum amount the new bank will provide to fund a negative closing balance on the old account (this value may be zero) AUDIT TRAIL The Account Switching Service will maintain a full central message archive to provide an audit trail recording all Account Switching Service actions. The information recorded for each action will include: The date and time the action was initiated The details of the party that initiated the action The data contained in the action Any exception condition encountered (e.g. technical rejections) The data will be maintained in the audit trail for a period of seven years. The actions will be purged from the audit trial on an individual message basis. Participating banks will retain a record of the account switch contract and related switch data in line with their data retention policy MANAGEMENT INFORMATION Specific management information is required to support the operation of the account switching service. This management information will be captured and made available to the operators of the switching service and its participants to monitor activity, performance, and compliance with switching service and payment scheme rules. This data may also be used to support charges for use of the service and for non-compliance penalties that may apply. The information will include: Data that will be used to quantify the performance of the participants in meeting the service level agreements (SLAs) and performance commitments that will be stated in the customer contract (the contact between the customer and the new bank). Data that will be used to measure the performance of payment scheme service users in updating their data in response to advices. Data that will be used to identify banks and service users that fail to meet SLAs and do not comply with service rules. 20 VERSION JANUARY 2017

21 5 SWITCHING CONTRACTS AND SERVICE RULES A common set of contracts and rules will be required that define the commitments that will exist between the customer and the new bank and between the old bank and the new bank. The contracts will define and establish rights and responsibilities of each party during the switching process, including: Define the service that a bank will deliver to a customer requesting that an account is switched Define the core switching contract that all new banks must include within their own switching packs Service rules that define the services that operate between the new and the old bank to support the customer service 5.1 CUSTOMER FACING CONTRACT The customer contract defines the service that the new bank will deliver to a customer requesting that an account is switched with the seven working day guarantee a full switch. The contract for the seven working day guaranteed account switch will cover: The requirement for the customer to provide information to the new bank that will enable it to effect the switch of account and payment arrangements for the customer: - Details identifying the old account (e.g. sort code, account number, account name and the last 5 PAN digits of any debit card associated with the old account). - The customer authority to transfer the balance and close the old account aligned to the old account mandate authority. The service that the new bank will deliver to the customer: - Transfer of payment arrangements - Transfer of future dated payments with due date later than the completion of the account switch (the old bank is responsible for payments due to debit the customer s account up to and including the switch date of the account switch) - Transfer of closing credit balance from old account to new account - The transfer of funds, up to an agreed limit, from the new account to the old bank for a closing debit balance - The timing for the switching process including a clear start and end date for the switch (the seven working day guarantee) that is agreed with the customer - The timing for any post switch process (redirection and transaction forwarding processes that will operate for a minimum of thirty-six calendar months and longer if required) - The list of payment arrangement types (Direct Debits Instructions, Standing Orders, bill payment arrangements and future dated payments) that will and will not be automatically redirected following the switch - In the unlikely event that something goes wrong with the switch, the new provider will refund any interest or charges incurred on your old or new account as a result. The customer has rights, supported by various regulations, to cancel a number of the actions that take place during an account switch. The processes to be used to action a customer s request to 21 VERSION JANUARY 2017

22 cancel different actions are described in section 4.7 Exceptions within ASSD2 [Ref 004] (see [SX1.9] to [SX1.12]). Further information on a customer s cancellation rights is provided in the Guide & Rules [Ref 007]. Notifications that will be issued to the customer during the processing of the account switch: - Start of switching process if the switch request is submitted by customer at the time account opening started (the switching contract can only commence once the new account is enabled.), - The receipt of a request to switch account at the old bank, - (Optional) List of arrangements received from the old bank, - The time at which the balance transfer will be made, - (Optional) the balance transfer amount. 5.2 SERVICE RULES The service rules act as the contract to define the services that will operate between the old bank and new bank to support the provision of the Account Switching Service to the customer. The rules will include: The definition of the responsibilities that each bank has in the execution of the account switch. Confirmation of which bank is liable for any fraud losses on accounts that are switched fraudulently. Confirmation that the old bank may reject the application for an account switch where fraud is suspected. The obligations that the new bank and the old bank have to make checks to validate the switch request. Service levels for exchange of information: - Data exchange between new bank and old bank: - The data messages - The data passed in the messages - Processing windows and cut-offs for switch services operations - Notifications that will be made to payment originators (e.g. DD service users and DC originators) to effect changes to payment arrangements following the switch Timings for events in the switch process. The processing of balance transfers. The processing of transaction forwarding. The processing of a payment made by the new bank to the old bank following completion of the account switch when the old bank has been required to accept a debit against the old account. Mandatory communications with the account holder. 22 VERSION JANUARY 2017

23 6 HIGH LEVEL PROCESSES AND SERVICE CONTEXT 6.1 HIGH LEVEL PROCESS AND TIMELINE (FULL SWITCH) The diagram below shows key actions performed by stakeholders (in an example scenario) when processing a full account switch. The participant processes (e.g. the blue Validate switch request box in the diagram above) and associated requirements are defined in full in ASSD2 [Ref 004]. The detailed Account Switching Timeline is also defined in ASSD2. The interbank messages (green strips in the diagram above (e.g. MSG02) are defined in ASSD3 [Ref 005] and accompanying central requirements (e.g. the blue Redirect transactions box in the diagram above) are defined in ASSD4 [Ref 006]. 23 VERSION JANUARY 2017

24 6.2 SERVICE PAYMENTS CONTEXT The diagram below shows the payments context of the Account Switching Service. 24 VERSION JANUARY 2017