Less than a third of customers moving from Ulster and KBC have updated direct debits

Only 30 per cent of Ulster Bank and KBC Bank Ireland customers who have to move their banking elsewhere have updated direct debit arrangements with their new account details, according to Banking & Payments Federation Ireland (BPFI).

BPFI issued the estimate as the lobby group and its members prepare to host a round-table meeting on Wednesday with the Central Bank of Ireland, ComReg, the Commission for Regulation of Utilities and a “wide range” of direct debit originators, amid ongoing efforts to avert a crisis of widespread missed payments as a result of the so-called big switch. Account holders who do not update their direct debits risk missing payments on numerous bills from utilities to mortgages.

About 500,000 active Ulster and KBC personal and business current accounts as of the end of last year have to move as both lenders prepare to exit the Republic, according to senior industry figures.

More than 600,300 current and deposit accounts were opened with the three remaining retail banks in the first eight months, covering accounts that are moving as well as openings that would occur in a normal year, according to the Central Bank. However, barely a quarter of Ulster and KBC accounts were closed during the period, as most households and firms delay doing so until their new banking arrangements are running smoothly.

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“Over the last six months BPFI has been engaging with direct debit originators on a monthly basis to discuss emerging issues and to allow for key considerations to be highlighted at a broader level,” said Brian Hayes, chief executive of the organisation.

“Opening a new account is just the first step in the process and we estimate ... that around 30 per cent of customers moving account have updated their direct debit originator with their new bank account details.”

He said that “further action is required by both customers and the wider industry in this regard”.

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Meanwhile, Ulster Bank issued a warning on Tuesday to business customers whose accounts face being frozen from the middle of next month, as it winds down, that they risk failing to meet payroll and receiving and making general payments if they delay finding a new account provider.

The bank started formally writing to groups of business and personal current and deposit account customers in mid-April to give them six months’ notice to move their business to another provider.

The six-month deadline starts to fall on a rolling basis from the middle of next month. KBC started giving its customers six-month notice from early June.

“Ulster Bank is urging customers to take action to ensure continuity of service for their business banking needs. If a customer does not switch or close a business’ current account, it could have implications for their business in terms of paying their employee wages, their suppliers and receiving payments for their own goods and services,” said the UK-owned bank.

“We understand also that many customers will choose to keep their account open during their period of transition to a new provider. If at the end of their six-month notice period a customer has not moved their account, the account will become non-operational and after a month will be closed with a cheque issued for the account balance.”

Ulster Bank, which is part of the NatWest Group, issued a similar public warning for personal current and deposit account customers earlier this month.