It should be a lot easier for customers to change banks, the Competition and Markets Authority has ruled. The watchdog introduced a raft of proposed measures that should make switching accounts easier and ensure the banking sector is more customer friendly.
Although more drastic measures, such as breaking up specific big banks have been rejected, the CMA underlined the need for initiatives to improve the situation for banking customers after considering findings by the regulator that Britons could save £70 a year on average by switching personal accounts and the fact that well over half of consumers have been with their current bank for more than 10 years.
"There have been long-standing concerns about the retail banking market, where many customers could save money and get better services by switching accounts," chair of the investigation Alasdair Smith said. "This investigation was an opportunity to take a detailed and independent look at the sector."
Over a third of UK account holders have been with their bank for over 20 years. Previously, the CMA set out plans to make the switch of energy providers easier and clarifying the information around the process. The idea behind these initiatives is for customers to get the best out of the free market and exploit the opportunities of a competitive industry.
The Current Account Switching Service (CASS), a free resource set up in 2014 for customers to make the switching process more accessible, works well, according to the CMA, but the watchdog found that there is not enough confidence in the sector and the process is too complicated for account holders.
The regulator is planning to set up a new website to help account switching, that should be an improved version of the CASS and adds a price-comparison service.
Matthew Fell, the interim chief policy director at the Confederation for British Industry (CBI) commented that business and consumers alike will welcome the new measures to the retail banking market, arguing that the better choice will help the situation for both parties.
However, he warned: "There are positive changes already taking place in the banking sector, with lots of challenger banks entering the market, a new and reliable switching service and a significant take-up of digital banking offering 24/7 access. The CMA should take care so as not to knock this good progress off course.
"We want the CMA and regulators to focus on measures that help challenger banks scale-up, by levelling the playing field on the cost of capital, whilst helping to publicise the switching service," Fell concluded.