What is the business banking switch scheme?

 In Small Business Accounting

Royal Bank of Scotland has launched a novel programme to help diversify the UK banking market for small to medium-sized businesses. Should you be taking part?

The Business Banking Switch scheme is a fund set up by Royal Bank of Scotland (RBS) to incentivise other banks to come up with offers and discounts that are better than those normally available in the banking market.

As 70 per cent of business current accounts are with the four major high street banks, the initiative supports a government policy objective to re-distribute market share for small business banking.

If it sounds a bit odd — a major bank paying competitors to take its customers away – it is. But it was part of the agreement RBS made with the UK government in return for its £45 billion bailout after the financial crisis of 2008. RBS made a commitment to help increase competition in UK business banking and reduce its market share.

RBS was originally going to do this by setting up a new bank under the legacy Williams & Glyn brand name – which was absorbed into RBS back in 1985. But that plan has since been shelved in favour of the business banking switch scheme.

With 70 per cent of business current accounts held by the four major high street banks, the business banking switch scheme supports a government policy objective to re-distribute market share.

How do I know if I’m eligible to take part?

Eligibility for the Business Banking Switch scheme depends on the following criteria:

  • You must be a Royal Bank of Scotland SME business customer
  • Your business’s annual turnover can’t exceed £25 million

You won’t be eligible if:

  • You joined RBS after 5th November 2018
  • Your business is in financial difficulty 

Which banks are taking part in the scheme?

  • Arbuthnot Latham & Co
  • Clydesdale Bank
  • Co-operative Bank
  • Hampden & Co.
  • Handelsbanken
  • Metro Bank
  • Monzo Bank
  • Nationwide Building Society
  • Santander UK
  • Starling Bank Ltd
  • TSB Bank plc

Who does the programme affect?

If you’re eligible to participate, you’ve likely been contacted already by RBS. Participating banks may have their own eligibility criteria as well.

When does it all start?

The scheme went live in February of this year. It’s still open to RBS customers who haven’t taken advantage yet.

How do I switch?

Go to the RBS website and click here to select from the participating banks you’d like to hear from. They’ll then get in touch with their offers. Choose the one that best suits and your old and new bank will facilitate the switch.

How should freelancers react?

For many sole traders and freelancers being told to switch banks may not be welcome news. If you’ve been happily banking with RBS for decades, being forced to set up new banking arrangements may unwelcome news and a time-consuming hassle.

The scheme has been incentivised however to help minimise any negative impact on current customers. It’s designed to create offers that are better than those normally available on the market. These could range from cash for switching to no-fee banking. Switching could turn out to be a win for your independent business.

Another potential benefit could be the opportunity to refinance any current debt. Moving accounts could provide the impetus to look at your finances and see if you can get a better deal elsewhere. If you need to move business debt as part of the switch to a new bank, you may be able to refinance or even access new funding.

Still have questions?

When evaluating the potential benefits of a switch — particularly if debt refinancing is on the table — it’s a good idea to consult an accountant. Feel free to call 0203 793 1703 or via our website for advice on small business banking options that work with Xero and FreeAgent.

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