Time is running out for banks to meet their financial commitments.
In a move that could have huge implications for millions of UK households, bank customers could soon be able to pay bills with just a phone call.
The move has been a long time coming, with the Financial Conduct Authority (FCA) warning banks could face fines and legal action for not complying with its guidelines.
But that hasn’t stopped the industry from getting ahead of its time and introducing the idea last month.
The FCA says a “telephone-based payment” is the fastest and easiest way to pay for an order.
A customer would ring up their bank and ask them to accept the order using their mobile phone, the bank would charge the balance to their mobile and a prepaid card would be sent to their account.
The customer would then make a phone payment, which they could then transfer to their bank account or transfer to an electronic wallet.
“The customer then has the opportunity to transfer the balance from the bank to their prepaid card to pay the balance or, in the case of electronic payments, to pay off a loan or debit card,” the FCA said.
This method could be a much faster, more cost effective way of getting payment to people without the need for a bank account, the regulator said.
It also means that if a customer needs to make a cash payment for a mortgage or an account fee, they can simply ring up the bank and the transaction will be recorded as a cashier’s check and the payment will be processed without a bank branch.
The regulator said the system would be “comprehensive and robust”.
It also said the change could save customers up to £30 per transaction.
“This system is a significant step forward for our customers who rely on our financial services and our businesses to be able access credit and debit information, so they can make and pay for payments quickly and easily,” said FCA chairman Sir Michael Rake.
The FCO’s new guidance says banks must now implement this new method within six months, but it has not been released publicly.
However, a spokesman for the Financial Services Authority (FSA) said that they are working on a new system to make it easier to pay.
“We are working with the FCO to deliver a new set of guidelines and guidance to enable a greater range of payment methods to be used to pay,” he said.
He said the new rules are “the most stringent yet” for the industry, with no limits on the number of people who could be affected.
“It is the most comprehensive and robust guidance available for the financial services industry to implement,” the spokesman said.
He added: “The FSA is working with our customers to ensure they can continue to access the financial and credit services they need and deserve, without having to take any further action.”
The move comes as many businesses and individuals struggle to get their bills paid on time.
Last year, there were 1.3 million bank accounts in the UK that had not been paid for.
It comes as consumer confidence is at a low level following the election of the Conservatives, who campaigned on a promise to ease up on the banks.
The Financial Conduct Agency says the move is a step towards tackling the issue.
“For consumers, the FCE’s guidance makes it easier for them to pay their bills without being overwhelmed by complex and time-consuming processes,” a spokesman said in a statement.
This means they can pay their mortgage quickly and get on with their lives, while making sure their payments are processed quickly.