CMA recommendations won’t affect real competition
October 22, 2015
The Competition and Markets Authority today released its preliminary findings on competition in the retail banking market, which serves individuals and small and medium sized enterprises.
The main recommendations from the investigation are that the banks do more to encourage consumers to switch, such as making it easier to compare accounts, renewed promotion of the Current Account Switching Service, and prompting SME customers to switch at key trigger points.
Significantly, the CMA stopped short of recommending that banks charge regular fees for current accounts, or to break the banks up into smaller entities.
Responding to the news, Campaign Manager for Move Your Money, Fionn Travers-Smith, said:
“Greater transparency in the banking sector is always welcome, and a renewed focus on current account switching will make it easier for people to align their financial power with their values.
“But refusing to consider breaking up Britain’s massive mega-banks misses an open goal for affecting real competition in the sector, and leaves Britain vulnerable to future crises.
“The UK is alone in relying almost solely on five universal banks to support our economy, and low levels of switching reflect the fact that these major banks are all structurally the same and all act the same.
“Breaking these up into different types of banks, including into ones that offer greater support to stakeholders, would more greatly affect competition in the banking sector, because these banks would be genuinely different.
Instead, enhancing greater switching between the current players, whilst welcome, is promoting more of the same and expecting different results.”