The Competition and Markets Authority (CMA) has published its provisional findings report, alongside 11 appendixes, following its retail banking market investigation into the supply of retail banking services to personal current account (PCA) customers and to small and medium-sized enterprises (SME).
As part of the investigation the CMA identified that:
- there are a number of competition problems in both the PCA and SME banking markets. Particularly, the CMA found that low levels of customer switching meant that banks are not put under enough competitive pressure, and new products and new banks do not attract customers quickly enough;
- in the case of PCAs, the opening and / or switching process is seen to be time-consuming, and at risk of things going wrong;
- SME charging structures are complex and difficult to compare, there are no service quality measures to aid comparison and there are limited effective price comparison tools for SMEs;
- accounts which are more expensive and below average quality are not losing customers to cheaper and better alternatives at the rate that would be expected in a well-functioning market; and
- there have been a number of positive developments: (i) new entrants into both PCA and SME banking; (ii) innovative products becoming available; (iii) the digital innovations associated with online and mobile banking; and (iv) new tools like Midata and CASS, which have the potential to increase searching and switching.
To address some of the issues the CMA has published an initial list of remedies, which sets out possible measures aimed at increasing competition and securing a better deal for customers. The CMA states that it will develop these proposals over the coming months.
View CMA retail banking market investigation, 28 October 2015