All change at Halifax

Many customers of Halifax/Bank of Scotland may face an administrative mess as they try to switch accounts, writes CAROLINE MADDEN

FOR CUSTOMERS of Halifax/Bank of Scotland, its imminent departure from the Irish market will leave many tangled up in an administrative mess as they engage in the process of switching accounts.

Account holders will start receiving letters from the bank over the next two weeks, detailing the impact of the changes but, with banking services due to end by May and all branches to be closed by the end of June, those with Halifax accounts should start taking action now to make sure they meet the deadlines. But how exactly will the changes impact on the different types of customers and what needs to be done?

BANKING

The departure of Halifax from the Irish market is likely to cause current account holders the most pain as they will need to go to the effort of finding a new bank with which to conduct their day-to-day banking.

As this involves redirecting direct debits, pay cheques, mortgage payments, standing orders – to say nothing of the hassle of waiting to get new debit/Laser cards among other things – customers will find it a cumbersome task.

As such, while Halifax customers have until the end of May to switch, customers would be wise to start this process now by looking for a low-cost alternative. Moreover, outstanding overdrafts will need to be cleared by the closure date.

If you’re looking for an alternative provider of a current account, banks which offer transaction free banking include PostBank, Ulster Bank and both AIB and Bank of Ireland provided you meet certain requirements.

If you banked with Halifax because of the interest earned on your current account, you will find it difficult to find a suitable alternative, with rates on offer generally low.

Permanent TSB, however, offers 2 per cent on balances up to €1,500 provided you fund your account with €1,500 every month.

To close your account and move your funds you can drop into a branch or call the helpline on 1890 818181 and they will start the process of closing your account for you.

SAVERS

If you have a flexible savings rate account with the bank, such as a Flexi Saver or Child Saver account, you have until the end of May to move your funds.

If you wish to withdraw cash when closing an account you must bring the following identification with you – a Visa Debit Card, passport or driver’s licence and a household bill.

If the withdrawal is bigger than €1,600, the bank will require 24 hours notice. Alternatively, you can transfer funds to a different bank electronically.

Given that Halifax offered such a keen rate on deposits, you will need to shop around to find a decent replacement.

Nationwide UK, for example, has a variable rate account at 3.3 per cent, while EBS offers 4 per cent for regular savings with its Family Savings Account.

On the other hand, if you have a fixed rate account with the bank you do not need to do anything yet as the account will continue under its existing terms until it matures or you decide to withdraw your money.

MORTGAGE HOLDERS

For homeowners who took out a mortgage with Bank of Scotland over the past decade, the bank’s departure from the Irish market shouldn’t have an immediate impact. Mortgages will continue under their existing terms until the loan is paid off.

However, given that the bank has closed to new lending, if you wish to refinance debts into your mortgage, or top-up your existing loan, you will be unable to do so. On that basis you may wish to switch to another financial provider. However, given that the bank’s arrival in Ireland corresponded with the property boom, this may not be an option for many customers, with most banks now looking for loan-to-values (LTVs) of at least 80 per cent for those remortgaging.

So, if you are in negative equity, or bought a house for €300,000 and still have €280,000 outstanding on the mortgage, you may find that this isn’t an option.

This puts homeowners in a vulnerable position as the bank could decide to push up its standard variable rates to penal levels, which would hit customers coming off fixed rates. The bank has given a commitment not to do this, as it says it would simply push too many customers into arrears.

This may change, however, if suggestions that the bank will sell, or outsource, its loan book to a third party materialise, thereby leaving mortgage holders exposed to practices at the new institution.

BORROWERS

If you have a personal loan outstanding with Halifax, you do not need to do anything. It will simply continue under the existing terms until it is paid off or you decide to close it early.

If you decide to redeem it early you may still be required to pay an early settlement fee despite the fact the bank is looking to get out of the market.

Halifax credit card holders, on the other hand, may find themselves in a bit of a squeeze depending on how much they have in outstanding borrowings. With these accounts due to close by the end of May, account holders have just two options:

1) clear any outstanding balance by this date with their own funds and apply for a new credit card with another service provider;

2) apply for a new credit card and use these funds to clear the balance with Halifax.

If you can afford to clear your balance, you should be able to avail of a new credit card with another service provider, although your credit limit may not be as high as it used to be. If, however, you need to borrow against another credit card in order to clear your balance with Halifax, you may find it difficult to get the requisite funds.

Credit card companies are clamping down on the amounts of credit given out and cherrypicking customers.

You could try MBNA, however, which is offering 0 per cent APR on balance transfers for 10 months.

If you are unable to find the funds to clear your balance by the end of May, Halifax says it will work with you to convert the balance into a personal loan, and this process will be completed by the end of June.

If you’re looking for a new card you could consider an AIB Click Card, which has a rate of just 8.5 per cent, or a Bank of Ireland Clear Card, which charges 9.5 per cent.

INVESTMENTS

If you bought an investment, long-term savings or pension through the bank it is likely to have been an Irish Life product, and so these policies are unaffected by the bank’s departure.

Similarly, if you invested in the bank’s Phoenix range of capital guaranteed investments, these are also unaffected by the closure and will run to maturity.

INSURANCE

For those customers who took out a mortgage protection and/or life cover policy, there will be no change to policies, and they will continue on current terms.

If you have home insurance with the bank you will be informed of a change in home insurance provider when your renewal date comes around and will be provided with options. You can then decide if you wish to renew or not.

KEEPING IN TOUCH

If you have a retail product such as a personal loan or a mortgage with Halifax/Bank of Scotland and you wish to keep in touch with the bank after its branches close, you can ring one of its helplines, which the bank says it is keeping open for the foreseeable future.

The numbers are:

Halifax customers: 1890 818181

Homeloans: 1800 556 583

Asset Finance: 01 898 0004

Motor Finance: 01898 0002