After an 18 month long investigation, the Competition and Markets Authority (CMA) today announced its plans to improve the UK’s £16bn current account market. But falling short of the mark, the CMA’s inquiry has achieved little more than to propose basic information measures.
Time and time again it’s been proven that competition in the banking sector isn’t working for consumers. It’s a sector in urgent need of a shake up.
The regulator believes today’s proposals could benefit bank customers by around £1bn over the next five years.
The CMA’s proposals to improve the banking market include:
- Plans to improve overdraft arrangements, with alerts to warn people about to slip into overdrafts and proposals to require banks to disclose the maximum unarranged overdraft fees they charge per month
- New online comparison tools and more prompts to encourage people to switch
- Plans to improve the current account switching switching service
Our Director of Policy and Campaigns, Alex Neill, said:
‘After 18 months this inquiry achieved little more than to propose basic information measures that the big banks should have introduced years ago. Steps to stimulate switching are welcome but the chance to deliver better banking for all consumers has been missed.
The responsibility will now ultimately lie with the Financial Conduct Authority to ensure that reforms deliver better banking services for everyone.
Alex Neill added:
‘They must also go further than better information to tackle the unfair, punitive charges faced by unauthorised overdraft users, some of whom are hit with fees far in excess of payday loans.
‘Only when the regulator addresses these unfair charges, and holds the banks to account for poor customer service, will we see the shake up in banking that's so desperately needed.’
Earlier this year we launched our campaign for Better Banks. We’re calling on the regulators, government and banks deliver better everyday banking. If you agree too then please sign our petition.
Two of the big banks have come out in support of our Better Banks campaign, which calls on the industry to deliver better everyday banking for their customers.
Les Matheson, CEO of Personal and Business Banking at RBS and NatWest, said:
'We agree that Britain needs better banks and that is why over the last few years we've been challenging the industry to help our customers out, not catch them out and we're proud of how we're making banking simpler and fairer for our customers.
'Our new Reward current accounts are market-leading and the overwhelming feedback we've had from our customers is that they give them help where it matters most by rewarding them 3% back on a range of household bills. We've scrapped unfair teaser rates, we offer our best deals to both new and existing customers and our staff are no longer incentivised to sell, meaning they can fully focus on the needs of our customers.
'We offer innovative ways to bank, such as Apple Pay and an award-winning app which allow customers to buy things using their phone and get cash from an ATM using their watch. All of which resulted in us being voted No. 1 for NPS for mobile banking. We've also seen the number of complaints we receive reduce by 14% for NatWest, and 11% for RBS.
RBS came bottom in our latest banking customer satisfaction survey, with Natwest also in the bottom ten. In response to this, Les Matheson said:
'Whilst we are disappointed in these results, we are determined to do more and we are working with Which? to support their campaign, including raising awareness and education of products - not just for our customers, but across the banking industry.'
Nationwide has also come out in support of our campaign to improve levels of customer service in banking.
Terry Kaye, Divisional Director for Customer Experience at Nationwide Building Society, said:
'As a mutual, Nationwide is owned by and run for the benefit of its members meaning they are at the heart of what we do. The Society already has the highest customer satisfaction scores amongst its banking peers, but we aren’t complacent and are always striving to further improve the level of service offered to our customers.
'Most recently we have launched an initiative called Customer First, which further empowers our staff to offer the highest level of service possible. Customer First is about ensuring we do the right thing for our customers right across the organisation, whether that be in their dealings with front line staff or decisions being made within the business. Our view is that if our staff feel empowered, they will want to do the best they can for our customers.'