Personal account customers will find it easier to manage their
money, find the best deal for their needs and avoid overdraft
charges, and small businesses will benefit from greater
competition and better access to finance.
The Competition and Markets Authority’s (CMA) shake-up of the
banking industry will offer overdraft users the opportunity to
save an average of £180 a year, while other current account
holders can save an average of £92.
In its final report on
the retail banking market published last year,
the CMAannounced a package
of reforms to make banks work harder for their customers, and
help people take control of their banking using innovative new
services.
Today’s final
order formally implements these reforms and sets out the
strict timetable for introducing key advances such as open
banking, the monthly maximum unarranged overdraft charge,
standardised business current account opening procedures, and
banks having to publish service quality statistics.
Alasdair Smith, Chairman of the retail banking investigation,
said:
Open Banking will make a transformational change to banking for
personal customers and small businesses. For the first time
innovative and secure apps will provide personalised services
and information to cover all financial needs in one place, and
make it easy for people to find out what bank account is best
for them.
We’re also making banks send alerts to people about to slip
into overdraft to help them try and avoid unnecessary charges.
Banks receive £1.2 billion a year from unarranged overdraft
charges. A new alert system, combined with our order to require
them to publically announce their maximum monthly charges,
should mean significant savings in future for their
hard-pressed customers.
Today’s announcement represents an important milestone in a
co-ordinated set of actions taking forward the CMA’s banking reforms.
The CMA has already
accepted undertakings from
Bacs to make ‘ditching and switching’ easier. It has committed to
improve the Current Account Switch Service within a year by
extending the time the automatic redirect service is available
when they switch banks, actively provide information to those
people who would benefit most from changing bank and introduce
independence into governance of the switching system.
Small businesses will also benefit from the Open Up Challenge run
by innovation charity Nesta, which will enable the development
and delivery of comparison and advice services, and
the CMA implementing
measures that will increase the transparency of cost and
eligibility of SME lending.
The Financial Conduct Authority will take action in response to
the CMArecommendations
which will include supporting the work on open banking, testing
prompts designed to increase consumer engagement and alerts that
increase customers’ awareness of their overdraft usage,
publishing service quality information and reviewing the
effectiveness of banks’ introduction of a monthly maximum charge
for unarranged overdrafts.
Key dates in the implementation of the banking revolution include
the launch of the Open Up Challenge run by Nesta later this
month, the first stage of the Open Banking data release in March
and a maximum monthly charge on unarranged overdrafts coming into
force in August. There is a full list here of the
remedies within the order and the timetable for implementation.
Notes for editors
- The CMA is the UK’s
primary competition and consumer authority. It is an independent
non-ministerial government department with responsibility for
carrying out investigations into mergers, markets and the
regulated industries and enforcing competition and consumer law.
From 1 April 2014 it took over the functions of the Competition
Commission and the competition and certain consumer functions of
the Office of Fair Trading, as amended by the Enterprise and
Regulatory Reform Act 2013. For more information see
the CMA’s homepage on
GOV.UK.
- The members of the Retail Banking Market Investigation Group
were Alasdair
Smith, Tom
Hoehn, Philip
Marsden, Jill
May and Ed Smith.
- See the retail banking investigation case page for
more information and our short
overview, infographics illustrating
some of our proposals and visuals.
