Almost 1m UK bank customers will be forced to use new sort codes – The Guardian

Almost 1 million UK bank customers will be forced to have to use new six-digit sort codes as the high street lenders implement rules intended to make the financial system safer, a Bank of England official has said.

James Proudman, a senior regulator in Threadneedle Street, said the estimate from high street banks included retail and corporate customers.

The change has been caused by the Vickers rules, which force banks to ringfence their high street operations from other banking activities.

Proudman added: “Banks will inform those customers that their sort code details are changing, when the change will take place and if there is anything they need to do.”

In order to minimise the disruption these changes could cause customers, Proudman said, “banks will ensure that any outgoing payments, for example standing orders and direct debits, are made as normal”.

The Bank of England regulator also revealed that the banking industry will have spent billions of pounds to meet the timetable for the new rules by 2019.

Some changes will also need to go through the courts, starting later this year, to allow business to be transferred into the “ringfenced bank”, Proudman said.

The rules are named after Sir John Vickers who recommended in 2011 that banks ringfence their high street operations from the riskier businesses after the financial crisis.

“As with any big infrastructure project, there is some potential for disruption to everyday activities as new group structures are moved into place and new ways of operating are brought on-line,” Proudman said.

He said ringfenced banks – typically holding bank’s retail customers – would need their own capital and pools of liquid assets to be able to “stand resiliently on their own”.

Each bank has its own approach to ringfencing. Lloyds Banking Group, for example, will house the bulk of its activities inside the ringfence but others will need to make bigger changes. HSBC is setting up its ringfenced retail bank in a new head office in Birmingham.

Barclays, for instance, has said it will hand out new sort codes over the Easter weekend next year.

Twelve months ago, Tushar Morzaria, Barclays’ finance director, compared the looming split to the uncertainty over Y2K or the adoption of the euro and said other banks would also choose the same date in 2018.

“That weekend we have to create a brand new bank, probably the largest bank that will ever be created in the UK,” he said.

Almost 1m UK bank customers will be forced to use new sort codes – The Guardian

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