CMA pushing for increased competition in banking services
Increased competition in banking services for SMEs and personal current accounts could be on the way.
The Competition and Markets Authority (CMA) has proposed a wide-ranging package of proposals to tackle the issues hindering competition in personal current accounts (PCA) and in banking services for small and medium-sized enterprises (SMEs), including new protections for overdraft users.
Many customers think it is difficult and risky to change banks and that 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.
CMA proposals include:
Banks would be required to set a monthly maximum charge for unarranged overdrafts on personal current accounts and also required to alert people when they are going into unarranged overdraft, and give them time to avoid the charges.
Banks should introduce an Open API (application programming interface) banking standard. This standard will enable personal and SME customers to safely and securely share their unique transaction history with other banks and trusted third parties. This will enable bank customers to click on an app, for instance, and get comparisons tailored to their individual circumstances, directing them to the bank account which offers them the best deal. You can see more on Open API in this report, on which ACCA provided assistance.
Banks should be made to regularly prompt their customers to check that they are getting good value from their banking provider. When these prompts direct customers to digital comparison services which give tailored price-comparison and service quality advice, the foundation has been laid for a major change in the retail banking sector.