The power to switch your mortgage 'in as little as seven days' (2024)

Consumers will be able to switch their mortgage provider, mobile phone, energy and broadband contracts within a week, under plans announced today.

In a major shake-up, ministers will promise to hand more power to customers fed-up with poor service from big business, rip-off banks and building societies.

They hope increased competition will drive down costs and end the frustration of being stuck with slow broadband, expensive mortgages or locked mobile phones.

However, consumer groups will want to see the details – with banks having a long track record for finding way of leaving customers dangling on the hook or hitting them with punitive exit charges.

In a bid to show the Government has not been paralysed by the EU referendum, a package will today promise that:

Consumers will be able to switch their current account or mortgage provider, mobile phone, energy and broadband contracts within seven days;

The broadband speed of every home will be published online so potential buyers know what they are signing up to;

Contracts for gas, electricity or other services taken out online can be cancelled on the internet;

Compensation will be paid if services are not switched when promised or if repair men don’t turn up.

The new rules, which could be in force next year, are being unveiled as the Prime Minister jets off to the G7 summit in Japan with his party and his Government dogged by in-fighting over the EU.

The seven-day period for switching mortgage supplier would kick in at the point when a homeowner had found another building society or bank willing to give them a mortgage. It would not apply during the time when a bank is carrying out onerous financial checks on a would-be customer – a process that can take weeks.

But, officials say, it will stop existing mortgage providers dragging their feet – and continuing to receive interest – after a customer does a deal to switch.

So, for example, if they were a customer of Santander and wanted to move their mortgage to Nationwide, they would have to go through the application process for a loan with Nationwide, and the promise to switch their deal in seven days would apply from the moment Nationwide had approved their loan. This often happens already, but the guarantee would protect customers in cases where funds are not transferred in time.

Ministers say the process should not take longer than switching a current account, and most banks already do that within a week. But in a survey released by the Government today, fewer than 60 per cent of consumers said they were able to switch as quickly as they would have liked.

The new rules will not be finalised until after a consultation but Business Secretary Sajid Javid said: ‘I want to give consumers more power over switching providers for the services they rely on to make sure they are getting the best deals.

‘The Government is committed to creating a system that works for consumers and makes markets more competitive.’

Under the Digital Economy Bill, households will be able to check broadband and network coverage information for individual properties. Information will be made available on websites showing the speed that can be provided by all the companies operating in the area, not just the current supplier.

The Government said it believes people will use the data when moving house, putting fast broadband at a premium. The Bill will also state that consumers will have to deal only with their new provider in order to switch, ending the headache of having to contact the old provider to exit a contract.

There will be an automatic entitlement to compensation from phone or broadband firms if a new package isn’t working on the promised day or a repair man fails to turn up. Customers will be able to cancel contracts online if they signed up for them on the internet. This will remove the misery of having to make a string of phone calls or being left stuck on hold.

Mobile phone users will be able to unlock their phone at the end of the contract for free.

This means it will be easier to change providers while keeping their existing handset. Overall, handset owners spend an estimated £48million a year unlocking their phones, Whitehall officials said.

Alex Neill, director of policy and campaigns at Which?, said: ‘Quicker switching ​will give people more power to ​force banks, energy suppliers and telecoms providers to up their game​ or lose their custom​. The​ Government ​should swiftly implement these plans.’