The Competition and Markets Authority (CMA) has outlined a wide-ranging package of proposals to tackle the issues hindering competition in personal current accounts (PCA) and in banking services for SMEs.
At present, it is hard for bank customers to work out if they are getting good value. Bank charges are complicated and opaque and many customers think it is difficult and risky to change banks.
As a result, nearly 60% of personal customers have stayed with the same bank for over 10 years and over 90% of SMEs get their business loans from the bank where they have their current account.
This means that competitive pressures are weak, so banks do not need to work hard enough on price or quality of service.
To transform the market the CMA believes banks need to be made to provide their customers with the right information so that they can easily find out which provider and type of account offers best value for them. The CMA also proposes to push the development of new online comparison tools and improve the current account switch service (CASS) to make switching banks more straightforward and give customers more awareness of, and confidence in, the process.
Alasdair Smith, Chair of the Retail Banking Investigation, said: “For too long, banks have been able to sit back and not work hard enough for their personal and small business customers. We believe the strong and innovative package of measures we are proposing will give customers the information and tools they really need to get a better deal out of the banks. They will also protect those who fall into overdraft from being stung with unexpected fees.”