New sort codes ‘could create fraud risk’
Rules intended to strengthen Britain’s banking system mean around a million customers will have their banking details altered.
HSBC is the first of the banks to change account numbers and sort codes for 170,000 customers, resulting in significant disruption as payments are redirected and cards are replaced.
The process – which will also mean tens of thousands of customers have to re-enter stored payment details into services such as Amazon – will expose consumers to the risk of fraud, HSBC has warned.
New “ring-fencing” rules laid down by the City regulator mean banks must separate consumer banking divisions from the rest of the firm’s operations, prompting the change at HSBC. In some cases customers’ sort codes link their accounts to what will in future become the “wrong” division. These customers need new account details.
The rule changes apply to any bank with more than £25bn in retail holdings, meaning that Barclays, Lloyds, RBS and Santander could also be affected. The new rules come into force in 2019.
HSBC has said it would transfer direct debits and standing orders – as would happen if you used the banking industry’s switching service and moved to a new provider altogether. So payments to utility firms, employers, spouses, friends, savings institutions and much else besides should be moved over for customers automatically – but critics have warned that disruption is inevitable.
In addition, customers themselves will have to update their account details for many online retailers and other services they use.
Consumer group Which? has warned bank customers to be on the lookout for cold-callers and fraudsters trying to take advantage of the disruption.