The Competition and Markets Authority (CMA) has delayed announcing findings from its investigation into the banking industry, originally started back in July 2014.
The CMA will now report back in August 2016, taking the duration of its probe well beyond the two year mark. The delay is due to the CMA wanting to ‘properly consider’ responses to suggested measures that will soften the impact of overdraft charges.
The CMA has, however, listened to our arguments on overdrafts and agrees that unauthorised overdraft charges need to be tackled. The remedies put forward include prompts and alerts for those approaching their overdraft, and grace periods to allow customers to avoid unarranged overdraft charges.
A lost opportunity
Still, the regulator hasn’t gone as far as we would have liked. It is not yet looking at requiring banks to charge the same fees for both arranged and unarranged overdrafts, for example.
Our executive director Richard Lloyd said:
‘This inquiry is now looking like a lost opportunity to deliver better banking for consumers. We are disappointed that the CMA appears unwilling to take action to control unfair, punitive charges faced by unauthorised overdraft users. More information and prompts are simply not enough.’
Shaking up the banking industry
The CMA needs to go beyond fixing the basics and come up with new solutions that will force banks to sit up and take action.
Richard Lloyd added:
‘The regulator should use this further extension of their inquiry to bring forward stronger solutions to tackle unfair charges and ensure banks are held to account for how they treat their customers.’
If you want to see the CMA shake up the banking sector with reforms that will genuinely deliver better banking services for everyone, 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.
Royal Bank of Scotland and Natwest
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.'
Today we launch our campaign for better banks, calling for coordinated action from the regulators, government and the banking industry.
Our latest banking customer surveys of more than 20,000 people have yet again found that the big banks are struggling to match the satisfaction levels of their smaller rivals.
Royal Bank of Scotland has come bottom of our table, with Barclays and NatWest also in the bottom 10. And then we looked specifically at ‘customer service’ on current accounts - less than half of the providers scored more than three out of five stars.
Some banks have proven they can get it right, with First Direct and Metro Bank performing well in our surveys. However, a lack of competition means this isn’t driving up standards across the whole industry.
Holding banks to account
We’re concerned that the Competition and Markets Authority's current proposals to reform the current account market are too focused on getting people to switch. The regulator should also focus on mechanisms that will ensure banks are held to account for how they treat their customers and to put customers in control of their accounts.
Our executive director Richard Lloyd said at the launch of our campaign:
‘It’s high time the industry put its customers first and the competition inquiry needs to ensure that banks are held to account for the way they treat their customers.
‘The big players in this market need to get on the front-foot and improve services for their customers, instead of waiting to be forced into action.’
Sign our petition
If you agree that we all deserve better from our banks, then please sign our petition and get your friends and family to do the same.
Last year, the Competition and Markets Authority (CMA) agreed that the market wasn’t working well enough for consumers, and opened a major investigation. Today, we’re calling on the CMA to make sure it goes beyond fixing the basics and comes up with new solutions that will force banks to sit up and take action.
We want to see reforms that will deliver genuinely better banking services for everyone. But what does this actually mean?
Well, what if the Competition and Markets Authority considered increasing compensation levels for people who experience terrible customer service, or naming and shaming the worst providers? Or how about banks being required to proactively help customers who regularly slip into their unauthorised overdraft, rather than just hit them with high charges?
It’s clear that the CMA has a big job on its hands, but this is the perfect opportunity to propose remedies that would finally shake up this sector and make banks respond better to the needs of their customers.