Huge bank account probe must go furtherWhich? wants watchdog to do more to improve market

02 October 2015


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The investigation into bank accounts needs to be widened, otherwise it risks failing to fix the problems in the market, says Which?.

Which? is calling on the Competition and Markets Authority (CMA), the watchdog responsible for the probe, to commit to testing a wider range of measures to improve the market.

In its new submission to the CMA’s inquiry into Personal Current Accounts, Which? says that its investigation must go beyond fixing just the basics and focus on a wider range of measures if its to fix the market.  

As a minimum, Which? wants the regulator to require banks to provide clearer, more transparent information on the cost of accounts, and ensure that consumers can make easy comparisons and switch providers without hassle. 

But the consumer champion warns that these changes alone, will not be enough to transform the market.

Consumers struggle to find the best deal

Research carried out by Which? earlier this year found just one in 10 people were able to identify the best account if they were using an unauthorised overdraft, while and just four in 10 could calculate the best if they stayed in credit. 

Which? believes that the CMA should overhaul the way that the bank account fees are displayed and communicated to customers.  

However, the CMA will have to go further than just looking at just price, because of the sheer number of people who either cannot or will not switch. 

In May, data released by the CMA suggests that 57% of people have gone more than a decade without switching their main current account, while 37% have held the same account for at least 20 years.

The report also suggested that only 3% of consumers have switched their main current account supplier in the last year.

CMA inquiry must focus on three key areas 

Which? wants the market investigation to focus on three key areas, that will spur banks into competing and improving the way they treat customers:

  • Fairness: The CMA should look at forcing banks to more proactively help customers who regularly use an unauthorised overdraft, as well as increasing compensation levels for customers who experience poor service. 
  • Control: The CMA should consider how banks can put people in control of their overdrafts, for example by notifying customers about hitting their current account limits before they go into the red.
  • Transparency: The CMA should explore how to make more use of information about the behaviour of banks to regularly name and shame the worst providers.

Which? says more detailed research is needed

Which? wants the CMA to conduct a much more thorough review of the current account market, that focuses on how people use their accounts - and on the quality of customer service. 

A recent review of more than one hundred Financial Ombudsman Service cases, carried out by Which?, found a number of occasions of poor customer service, which should be investigated further. 

These included banks failing to show proper consideration to those in financial difficulty or experiencing difficult personal circumstances, poor service and delays in responding to customers. 

The CMA has yet to announce how it will fix the market. But when it publishes its next report this month, Which? wants to see its ideas and how they can be tested properly, so that the inquiry delivers for positive change for consumers. 

CMA investigation must deliver better banking services

Richard Lloyd, executive director of Which?, said: 'We need the CMA to ensure its investigation is focused on reforms that will deliver genuinely better banking services for all consumers. 

'With few consumers moving their finances to different providers, and the existing big banks continuing to hold substantial market power, the inquiry must look beyond ideas to improve information and switching. 

When it reports next month the CMA should propose changes that will incentivise banks to better respond to the needs of their customers.'

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