Last word I can recall from the developers was that they are still considering it... so I wouldn't hold my breath, it may come at some time, but... it certainly won't be anytime soon.

But the topic has been mentioned many, many times before, so there is quite a bit of demand for this.

Personally I hope they will do it, but do it right. Not just some service token in the crown store that pops you over to another alliance... but an epic "cloak and dagger" style questline with a "faction loyalty called in question" theme to it, and a big choice in the middle - stay loyal to your faction (and spend the rest of the questline finding out who framed you, catch the true villain and prove your loyalty) or defect to greener pastures (and spend the rest of the questline preparing your escape, stealing some secrets to bring to the alliance you want to defect to and dodging your former comrades trying to stop you). And a nifty title, depending which way you go... either "(original faction) Loyalist" or "(original faction) Defector"...

Such a questline yould take place all over the non-DLC world, reusing some old maps that were in story quests and then never revisited... so it might be less effort for the developers then making something up completely from scratch... but it certainly would be neat to have many old and familiar faces around. I mean, if your character wanted to defect from the covenent, I am certain crafty Larissa knows a guy who knows a cat who might be named Razum-dar and can make some suggestions to that effect...

Making completion of cadwells a prerequesite for this would also be possible, as it might prevent questline entanglements (I mean... just think about it, if you were to switch while in the mainstroy... how would that go? Do DC until riventpire, then switch to AD... do you start AD from the beginning, and then contime the mainstory there? Or get thrown into AD in the middle? And what will be your cadwells silver/gold then? Or what if you go thrtough the mainstory in DC, start cadwells silver in AD, then switch to AD as base allaince, making the new cadwells sliver DC, and denying you the new cadwells gold because you ylaready finished DC...) but since One Tamriel, that is less of an issue then it used to be (because now you -could- just clear the questings whenever, and count for cadwells on the side anyhow). Other "let's not have entabglements" prerequesites might be completing your original faction questlines, or the mainstory... but as said, it could be bypassed with a bit of effort these days.

Another thing theorized about have been drawbacks for defecting. Like... reduced AP gains in cyrodil for defectors, since noone really trusts a traitor... and increased rewards if killed by their original faction since... well... noone really likes being betrayed either. And such drawbacks would help balance the fears of PvP imbalances where too many people might migrate to the "winning side"...