Background
We were concerned with the barriers some FM clients faced when trying to switch FM providers.
FM clients are typically small organisations that wish to collect money from their customers via Direct Debit, but who may be unable to do so directly. This is because to collect money by Direct Debit an organisation needs to be ‘sponsored’ by a bank or building society who is a Bacs member.
FM clients can use a chosen FM provider to collect funds from their customers account on their behalf.
An FM Provider reported concerns to us about an effective practical restriction on the ability for FM clients to switch their FM provider. We consulted on provisional conclusions and proposed solutions because we were concerned that this restriction created switching barriers that may inhibit switching and be detrimental to competition.
What have we decided?
We have decided to use our powers under Section 54 (Directions) of the Financial Services (Banking Reform) Act 2013 (FSBRA) to direct the operator of the Bacs payment system – Bacs Payment Schemes Limited (BPSL) to:
- ensure that commercial FM service providers that wish to do so can use the Bacs bulk change process to help clients who wish to switch to/from another provider
- submit for our approval a plan and timetable to achieve that outcome
Why have we decided this?
In using our powers in this way, we will provide certainty to stakeholders that the concerns must be remedied, which will support BPSL in implementing measures in a timely and effective manner. This is a sensible and proportionate way to ensure that the concerns raised are effectively addressed and that FM clients are empowered to easily switch providers.