The Competition and Markets Authority (CMA) has published a report detailing its provisional findings with respect to its market investigation into the supply of retail banking services to personal current account customers and to small and medium sized enterprises (SME).
The CMA has provisionally found that a combination of low customer engagement, barriers to searching and switching and incumbency advantages in the provision of personal current accounts in both Great Britain and Northern Ireland are having an adverse effect on competition.
The CMA has also provisionally found that the combination of barriers to searching, product linkages, the nature of the demand for SME lending products, information asymmetries and incumbency advantages in the provision of SME lending in both Great Britain and Northern Ireland are having an adverse effect on competition.
The CMA has proposed a series of possible remedies for the industry to consider and consult upon. These include forcing banks to prompt customers to consider switching to a rival in certain occasions, such as when the bank closes a branch or suffers an IT problem. The proposals also include suggestions to create a price comparison site for small business bank accounts and highlight the need for better sharing of credit information between credit reference agencies, banks and financial advisers to make it easier for small businesses to shop around for loans.
The CMA will now hold detailed discussions with all interested parties on the findings and possible remedies and will publish its final report in May 2016.