Response to Consumer NZ on switching

During June 2025 we shared information on our work to improve the switching process in Aotearoa New Zealand, in response to questions from an investigative writer at Consumer NZ. The story appeared online in late June under the title “Bank switching: are the banks holding back progress?”

We were given the opportunity to comment on a preliminary draft ahead of the article’s publication. We’ve reproduced our responses below for the record.

See our switching webpage here for more information.

Payments NZ governs the switching framework and standards. The switching experience itself is delivered by banks. Our role is to coordinate and improve this process with participants, not to mandate or control every aspect of execution.

Comparison with the UK’s CASS

The switching process in Aotearoa compares favourably to the UK’s Current Account Switching Service (CASS) model in several key areas:

• Set-up requirements: Both models require customers to open a new account and arrange products like overdrafts in advance.
• Account types: Both models support individual, joint and business accounts.
• Customer choice: In both markets, customers can select their switching date and choose whether to close their previous account or continue multi-banking.
• Switch timing: In the UK, the switching process begins 7 days prior to the customer’s chosen date. In Aotearoa, banks work directly towards the customer’s selected date in a more personalised manner.

It is also worth noting the significant cost difference: the UK CASS service cost approximately £700–750 million to establish. New Zealand’s approach delivers core functionality at a fraction of that cost, appropriate to our market size and context. Bank account switching service gets new advertising push | Banks and building societies | The Guardian

Functionality and limitations of redirection

While the redirection of incoming payments – such as salaries or benefits – is part of the switching process in the UK, in today’s environment where customers are at a greater risk of fraud and scams as well as being able to benefit from further innovation within payments, a redirection service can be counterproductive:

• Fraud risk: Redirecting payments from closed accounts can create vulnerabilities, hindering efforts across the industry to identify and close mule accounts, an essential fraud control. 
• Innovation barrier: It can impact interoperability, create a barrier to entry y for new banks, and break authorisation flows in open banking contexts.
• Customer delay: Redirection only defers the customers responsibility to update payment sources, increasing the length of the switching process and requiring additional customer action once redirection ends.

For these reasons, the Aotearoa payments industry is focussed on evolving the service alongside payments innovation.

Awareness and communications approach

Our newly launched switching website, www.readytoswitch.nz, is designed to provide a clear and accessible resource for consumers. It was directly informed by the UK CASS website and other international comparators.

Our site is consciously simple, streamlined and easy-to-read, to support consumer understanding of the switching process.

This resource is intended to support bank-led promotion and was developed in partnership with industry participants. The website offers straightforward guidance and links to banks for customers ready to initiate a switch.

A promotional campaign to raise awareness is in development.

Performance and personalisation

The switching process is built on customer flexibility and personalisation. The new bank works directly with the customer to tidy up payment instructions, including notifying direct debit initiators.

Switch performance is already strong:

• 99% of switches in April and May 2025 met the five-day service level agreement (SLA) for the old bank to send information to the new bank.
• 96% were completed in three days or less.
• In all cases where switching took longer than five days, this was due to a customer-chosen future switch date.

We are already reporting monthly switching volumes to the Commerce Commission, and historical data has been provided.

Industry leadership and switching

We remain committed to improving the switching experience for consumers and to providing transparent, accurate information about our work. As an industry-owned body, we act in the interests of the ecosystem and are making measurable progress in line with Commerce Commission guidance.

The suggestion that industry ownership prevents progress overlooks significant improvements already made and ignores the complexity of switching systems internationally. Effective governance, not structure alone, determines outcomes, and Payments NZ remains accountable to its participants, regulators, and the wider public interest.