A planned shakeup of Britain’s banks could force millions of people to have a new bank account sort code and cause disruption to the payments system, the industry’s main trade body has claimed.
Banks are being forced to insulate their high street operations from their investment banking activities in a bid to reduce the need for future taxpayer bailouts. The ringfencing regime could mean many high street banks are forced to radically restructure themselves. Some may decide to create distinct ringfenced and non-ringfenced divisions, which could mean that in future, many people will find they are effectively customers of a different legal entity.
Banks have a deadline of January 2019 to comply with the rules, but the British Bankers’ Association (BBA) has warned of challenges. In its response to a consultation on the planned changes, the BBA said ringfencing would have a considerable impact in the payments world, and added that one issue needing early attention was what would happen to sort codes – the six-digit numbers that identify both the bank and the branch where an account is held.
“Since only one legal entity can own a sort code, there is a prospect that sort codes may have to change for tens of millions of customers. This would impact not only the account holder but payees, and would also disrupt bank reference data used for payments integrity purposes and by third parties,” said the BBA.
It claimed the shakeup could also have a major impact on the Land Registry and Companies House, as they may mean changes need to be made to millions of records.
Paul Chisnall, the BBA’s executive director, said: “The banking industry is gearing up to meet the challenge of making the necessary but varied and complex changes by the 2019 deadline. In order to deliver the reforms on time, banks, the regulatory authorities and a number of government agencies will need to pull together to avoid any bottlenecks. In particular, we would like the regulators to try to put in place the new regime as quickly as possible to allow banks to make final decisions about how to structure their businesses.”
