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It was billed as a banking revolution that would allow millions of customers to transfer cash into other people's accounts within two hours, and would spell an end to waiting up to a week for money to move from one place to another. But some of Britain's big banks have now been accused of failing to keep a promise - made last May - to speed up money transfer times.
At the time, Nationwide building society joined a group of banks, including Abbey and Northern Rock, in pledging to make same-day transfers available to customers via the Faster Payments Service, whereby internet and phone payments that previously would have taken around three days could be processed in a couple of hours.
The move came after years of criticism from consumer groups that the banking industry was making millions of pounds a year in interest by taking three or four working days to clear funds from one account to another. Add in a weekend and a bank holiday Monday, and a payment made on a Thursday would not arrive at its destination until the following Wednesday. Meanwhile, consumers missed out on the interest they would have earned if the money was in their account.
But several of the banks that signed up to the scheme are yet to start offering a same-day transfer service to their customers. Abbey, for example, was due to introduce same-day transfers in November, but is yet to start the process. Northern Rock is similarly behind, while Nationwide and the Co-operative, Yorkshire and Clydesdale banks are still processing less than 10% of transactions in this way.
Even front-runners such as Barclays, which is now processing all internet banking transactions using the system, currently restrict standing order payments to £250, although the maximum allowed should be £100,000. Elizabeth Holloway at Barclays says: "Customers will be able to pay standing orders of up to £100,000 by the end of March."
While customers of banks such as Royal Bank of Scotland and NatWest, where almost 100% of transfers now go through on the same day, are happy with the Faster Payments Service, those denied this option are understandably annoyed. For them, the only way to ensure a payment goes through within 24 hours is to pay the £20-£25 fee for a same-day CHAPS transfer.
Sandra Quinn at bank payments body Apacs says: "We've had a very good response from customers who have been able to send and receive faster payments as a consequence of this initiative. However, it is obviously frustrating for those who are yet to benefit."
Another issue is that many people are confused about how long their money will take to move, and can miss payments and incur fines as a result. Dan Moore at consumer group Which? says: "One in eight people have missed payments of some kind because their money has taken longer than expected to clear."
One reason for the muddle is that, if you are transferring funds between banks, the receiving one must also have the service in place for the cash to clear on the same day. At present, there are 12 banks receiving same-day transfers and 11 sending them.
Quinn agrees that customer confusion about transfer times is an issue. "The scheme was always going to be rolled out gradually," she says. "However, customers should be told when their money is going to clear to prevent any confusion. Banks such as HSBC flash up a message when a transfer is instigated to tell customers when they can expect the transaction to go through, and we would like to see all banks and building societies keeping customers informed in this way."
Some people doubt that the banks feel any urgency about the new transfer system, given that they stand to make money from sticking with the old one - and that they have a lot on their plate at the moment.
Figures from Apacs show that, as of 30 December, about two-thirds of phone and online payments are being processed on the same day, but more than 50% of standing orders and four in 10 credit card payments still take several days to clear.
Some of the banks concerned blame the economic climate for forcing the faster payments initiative down the agenda. They claim this is why internet and telephone transfers are still being made using the three-day Bacs system. But Moore is unsympathetic: "Our view is that any bank unable to make same-day phone and internet transfers available to its customers in this day and age is either incompetent or dragging its feet for reasons of its own."
The length of time it takes for a cheque to clear is also a source of irritation, despite an Apacs initiative, called "2-4-6", to speed up the process. Quinn claims the initiative is useful for consumers because it means that, after paying in a cheque, they can be sure that at the end of six working days the money is theirs - unless they are a knowing party to a fraud.
The changes, introduced in November 2007, also set deadlines for when customers start earning interest on money paid in, and when it will be available for withdrawal. But six working days remains a long time to wait in the fast-paced modern world.
The problem, says Quinn, is that the industry is unwilling to spend money improving clearance times for a payment type that is becoming increasingly rare. "There is no business case to support changing the cheque clearance system because usage is falling all the time as people turn to more efficient payment methods such as online and telephone transfers," she says.
Cheque devotees are unlikely to find clearance times speeded up as a result. They can, however, complain if their money is not available within six days, as can bank customers who are not given clear guidance about when online and telephone transfers will clear.
Moore says: "The Financial Services Authority is very keen for banking to become more transparent for consumers, but information about clearance times remains very murky, so there is definitely room for complaint if you have lost out.
"There is also a lot of choice out there, so we would urge consumers yet to be offered access to the faster payments service to simply vote with their feet and switch their account."
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