The Competition and Markets Authority (CMA) has published its proposed reforms for the retail banking industry to give individuals and SMEs more control over their money by opening the business banking market to larger competition and introducing greater transparency through open banking
In the 766-page final report of CMA’s retail banking market investigation, the authority states how it wants banks to work harder for their customers and help people take control of their own banking through the use of new services.
The final order implements these reforms and sets out the timetable for introduction of reforms such as open banking, the monthly maximum unarranged overdraft charge, standardised business current account opening procedures, and banks having to publish service quality statistics.
The report highlights focus on improving competition in retail banking to the benefit of personal and business customers. The CMA aims to do this by improving products and services to disrupt the status quo and lead competition between banks. The report states: ‘this will stimulate entry by new competitors and expansion by smaller competitors, putting pressure on the market position of the larger banks.’
Ian Cass, chief executive of the Forum of Private Business, said: ‘We are pleased to see that the final report from the CMA reinforces the need for greater competition in business banking. For businesses that have not been supported by their banks for their cash flow and loan needs over the past few years, creating an environment where new entrants can indeed be part of their growth ambitions is good news. We rely on the CMA to ensure their recommendations are delivered as soon as possible.’
The CMA’s reform 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.
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.’
CMA will collaborate with the FCA, Treasury and the Department for Business, Energy & Industrial Strategy where possible to carry out its reforms.
Retail banking market investigation Final report is available here.
