CMA has published its provisional findings in its review of personal current accounts and SME banking. It found that low customer engagement, barriers to switching and search and incumbency advantages were leading to adverse effects on competition in both markets. CMA discovered that both SMEs and personal customers were likely to have been with their bank for many years and tended not to shop around. The provisional findings claim that “average” personal current account customers could save £70 per year from switching current accounts, while “heavy” overdraft users could save on average £260 per year.
CMA is now seeking views on a number of possible remedies, including:
- improving existing Midata and Current Account Switch Service (CASS) systems for comparison and switching: it also appears to recognise that lack of awareness of these systems is also a factor and suggests banks could be required to raise awareness of and confidence in CASS;
- requiring the creation of a new price comparison website for SMEs; and
- requiring better sharing of information with credit reference agencies, banks and financial advisers.
The proposed remedies will require the banks to cooperate and coordinate their behaviour in order to facilitate competition.
This is, perhaps, a recognition that:
- SMEs and personal current account customers are just not interested in suffering the hassle involved in switching current accounts in order to save £1-£5 per week; and
- the hassle must therefore be reduced as much as possible, through streamlining the process of shopping around and switching in order to minimise the time that customers must invest in order to switch.
(Source: CMA Seeks Increased Competition in Banks)