CMA concludes bank customers can save £70 a year

Banks will compete to lure customers to switch current account

The Competition and Markets Authority(CMA )  investigation into banking  has found Bank customers could save an average of £70 a year. Asian Lite News reports

Banks will compete to lure customers to switch current account
Banks will compete to lure customers to switch current account

After an 18 month inquiry, the Competition and Markets Authority (CMA) has stopped short of recommending a break up of the banks. By switching their current accounts to another provider, the customers could save the regulator has found.

But it said customers should be prompted to change providers if their branch closes or they are overcharged, reports BBC news.

Banks have welcomed the report, saying the industry is pro-competition.

However the CMA concluded that competition in the market is not working properly.

It said that the majority of consumers – 57% – have stayed with their provider for more than 10 years.

And 37% have had their accounts for more than 20 years.

Only 3% of customers switched in 2014, the CMA said.

Separate figures from the Current Account Switching Service show that the number of people transferring their current account has fallen by 14% in the last year.

Among its provisional recommendations, the CMA suggests High Street banks should:

  • Prompt customers to switch at certain trigger points, for example if their branch closes or overdraft charges change
  • Make it easier for customers to switch by up-grading Midata, a service which allows customers to see their transaction history
  • Set up a new price comparison website for small businesses
  • Fund a “sustained” advertising campaign for the Current Account Switching Service (CASS)

In addition it said that customers faced “complex overdraft charges and limited information”.

It said that those who go into the red on a regular basis could save as much as £260 a year by switching accounts.

However there was no reason to end the UK’s model of free banking, if a customer is in credit, the CMA said, adds BBC .

It found no evidence that the free-if-in-credit system distorted competition.

“Despite some encouraging developments, particularly in the shape of challengers that have entered the market in recent years, for too long banks have been able to sit back and take their existing customers for granted,” said Alasdair Smith, head of the retail banking investigation for the CMA.