Has the Competition and Markets Authority missed a golden opportunity to overhaul the banking sector?
Rishi Khosla, chief executive and co-founder of OakNorth, says Yes.
While the CMA’s proposals will make it easier for individuals and businesses to compare and switch current accounts, and should help improve awareness and shopping around in the market, SMEs have once again been overlooked. The CMA has simply passed the buck to the Treasury, which won’t look to review whether the proposed remedies have worked until two years from now. This is very disappointing news for the millions of small and medium-sized businesses that are seeking finance to grow and which were hoping that this investigation would finally deliver a solution to a problem that’s been going on for decades. The CMA is right in stating that the size and number of banks in the market is not the issue, but rather the type of banks. It should therefore be working with the Treasury and the regulators (the PRA and the FCA) to determine what can be done to ensure that more specialist lenders are able to effectively enter and compete in the market.
Kevin Mountford, head of banking at MoneySuperMarket, says No.
While there is still some more work to be done, the CMA is heading in the right direction. The regulator is finally paying attention to overdrafts, which have been a cash cow for banks for far too long now and, as a result, anyone in their overdraft will be able to switch their current account more easily if they wish, which could save them hundreds of pounds. The plans to improve the way banks communicate key issues to their customers are also a game changer, and could ultimately improve current account switching rates. Similarly, by forcing banks to make transactional data available, customers will be able to select products which are more appropriate for their needs. This is common in other industries, and could greatly improve customer experience in everyday banking. These measures do still need to be supported with greater transparency by the banks so that consumers can actually compare like for like products, but it’s a good start.