New ‘retry’ process helps customers avoid fees caused by bounced payments
From Monday 1 September 2014 a retry process will be extended within the banking industry to help customers avoid late payment charges on their account. The process means that when a customer’s Standing Order, Direct Debit or Future-Dated Payment ‘bounces’ because of insufficient funds in the account, the payment will be processed again by their bank or building society, later the same day. This gives customers the opportunity to pay cleared funds into their account, which will allow the ‘retried’ payment to be successfully processed the second time around.
All participating banks and building societies will give customers until at least 2pm to pay cleared funds into their account, but this is the minimum that they will offer – some might offer a cut-off time later than 2pm. However, Payments Council research undertaken last year showed that more than eight out of ten customers thought that a 2pm timescale would give them sufficient time to pay cleared funds into their account.
Introduction of the retry process is the result of a collaborative banking industry initiative, led by the Payments Council in response to customer-demand. It builds on an agreement reached in June 2013 between the Financial Conduct Authority (FCA) and seven of the UK’s biggest high street banks for them to use a same-day retry system.
To help people manage their current account in the best possible way, the Payments Council has produced a new guide that highlights: what the retry process is; how it benefits customers; and a number of tips to help customers, such as:
Review your outgoing payments and if any are regularly leaving your account on an inconvenient date, move them to a more suitable day.
If you need to pay cleared funds into your account, the fastest way is by paying cash in to your own bank or by making a Faster Payment via your online or phone banking service.
Customers should contact their bank or building society to confirm what the cut-off time is for them to get cleared funds into their account before the payment is retried.
Payments via phone or online banking will generally go through as a Faster Payment. However, you should check this with your bank if your payment is for more than £10,000.
Clive Adamson, director of supervision at the FCA, said: “We are pleased to see this extension to the retry system, first introduced in April 2013, helping more customers to avoid penalty charges. We estimated that under the old system, people were incurring £200m in penalties so this change can have a big impact on consumers’ banking experience.
“Importantly, this improvement came about not as a result of new rules but an agreement made between the Payments Council, the FCA and the banks, for the benefit of consumers.”
Jemma Smith, Director of Communications and Education at the Payments Council, said:
“The introduction of the retry process helps to give customers more control when it comes to meeting their financial commitments.
“This new process acts like a safety net for those situations when you might not have enough money in your account, giving you a chance to put things right by paying in cleared funds. However, if you find yourself regularly taking advantage of the retry process, I’d strongly recommendreviewing the timing of your payments so that they leave your account on a more suitable day.”
Before the introduction of this service - which some banks and building societies have had in place since April 2013 - a ‘bounced’ payment would not have been retried and the customer would have been likely to incur an unpaid item fee, as well as the possible loss of service or non-delivery of goods as a result of a payment not being processed. The retry process helps to give customers more control with regard to meeting their commitments, thus avoiding ‘bounced’ payments and any resulting penalty fees. The retry process relates to payments that are pre-notified (i.e. Standing Orders, Direct Debits and Future-Dated Payments), so cheques are not included. However, banks and building societies can compete on this - so some may choose to include cheques as part of their individual retry process.
To enable customers to provide feedback on their experience of the retry process, a form is available on the Payments Council website at paymentscouncil.org.uk/retry_process. Access to first-hand information will help the Payments Council ensure that the new process is delivering for customers. A newly-created guide to the retry process can also be downloaded from this part of the website.