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Let Bank Switchers Keep Account Numbers, Rep. Says

Until “number portability” was mandated in 2003, many cell phone users felt trapped with a particular wireless carrier, because switching meant giving up the phone number known to all their friends, family, and business associates. That’s how bank customers feel today: as frustrating as debit card fees and other charges may be, switching banks often doesn’t seem worth the hassle of informing business relations of a new account number.

So why not institute “account number portability” and make the switch from Bank of America to Citi as easy as going from AT&T to Verizon?

“There’s no good reason not to do that — we should,” Rep. Brad Miller (D-North Carolina) tells Pay Dirt. “The technology is already there – The FDIC already does it whenever they go into failing banks and electronically transfer the accounts to another bank. In fact, the only obstacle to this is that the banks are unwilling to do it.”

Miller, who’s on the House Committee on Financial Services, last year drafted legislation to make it easier for customers to move between banks, but at the time felt the the idea wouldn’t get much traction. Following the uproar surrounding Bank of America’s new $5 debit card fee this fall, and the anti-bank sentiments being expressed by Occupy Wall Street, he decided the time was right to dust off “The Freedom and Mobility in Consumer Banking Act.”

Introduced October 3rd, Miller’s bill doesn’t go all the way to requiring account-number portability, he says. “It should be comparable to moving your telephone number, but my bill doesn’t even go that far – everything the bill requires should be even easier for the banks to do.”

If passed, the legislation would make it simpler to close accounts, and for 30 days following the closure any direct deposits would have to be transferred to the new bank free of charge. During that period banks would also be obligated to notify customers when a recurring debit occurs. This measure wouldn’t completely remove all the hassles of switching banks, but would protect consumers from unnecessary fees and grief, he says.

The terms and fee structure of the every bank account would also have to be put into plain English, under the proposal. “Right now, it’s very difficult for consumers to compare, to tell which one is the best deal for them,” Miller says. “I have long wondered in dealing with consumer banking issues how banks get away with what they do, how they’re able to do the things to their customers without losing market share. This would hopefully bring more competition, and would probably make banks less likely to institute new fees.”

The American Bankers Association disagrees. “Consumers have many choices in the marketplace, and it’s easy to close accounts.  In fact, many banks already offer switch kits to make the process easy,” says Kenneth Clayton, chief counsel. “The bigger question is do we really need government to come in and protect consumers from something that isn’t really a problem?  Doing so will just drive up the costs of banks, and ultimately, the costs to consumers.”

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    • This is a bad idea. If someone else switched to my bank and had my account number I would refuse to change my account number. If someone wants to switch banks they should be willing to change account numbers too. Not only that but the cost of implementing this would be too high. The whole banking industry would have to change how they handle account numbers.

    • Redirecting routing number with bank number is stupid. It’s on par with the congressman that wanted to write a law allowing for IP address portability. Some numbers don’t need to transfer. The other parts of the bill make sense.

      If only conservative that believed “government regulation is bad” would stop being hypocrites by wanting to selectively regulate some things (abortion being the primary example).

    • I am a proud liberal but I don’t understand the purpose of this bill. Who is really behind this bill? I don’t think it’s the consumer. The bank account number by itself is meaningless. Comparing Bank account number with phone number is to compare apple with orange. The worst that can happen to a phone number is to get unwanted calls. For bank account, it’s my money you are talking about. So, Show me the cost benefit analysis for both a consumer and a bank.

    • I am a very conservative person and I believe the government SHOULD stay out of the way of the people and out of the private sector. But the government will not do what I want. The government WILL do what the government wants. And, as we have seen time and time again, if the private sector does not do “the right thing” the government will impose a solution on the private sector, and nobody will like that solution. That does not mean that the government SHOULD have the right to dictate what is “the right thing to do,” and it does not mean that the private sector should run scared and not stand up for itself. the private sector should not just cave in to whatever the government wants, but we have seen time and time again that the “cure” imposed by the government is worse than whatever the private sector could have come up with on their own.

    • Absolutely on point. Again government interference is killing the economy and even if it is well intentioned the results are counterproductive.

About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.

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