CMA consults on SME banking referral: CMA is consulting on a provisional decision to launch an in-depth market investigation into personal current accounts (PCAs) and banking services to SMEs. CMA and FCA have identified that there is not currently effective competition in these markets, and an investigation would allow CMA to impose wide-ranging structural remedies.

CMA and FCA have found that customers in the SME banking and PCA sectors face similar issues, namely:

  • newer and smaller banks cannot break into the market and expand;
  • high levels of concentration and relatively stable market shares of the largest banks persist;
  • lack of competition between banks results in a "sticky market" indicated by low levels of switching by customers;
  • lack of transparency makes it difficult for customers to compare products, particularly for PCA overdraft charges; and
  • customers report dissatisfaction, including in respect of service and prices. 

CMA is also considering reviewing the undertakings given by the major banks in 2002 following a Competition Commission investigation. The undertakings included measures to facilitate closing and switching accounts, restrictions on bundling of products and the provision of more pricing information to customers to improve transparency. Although a number of initiatives are already underway, CMA feels there is not enough evidence that they will result in the necessary competition improvements. CMA asks for comment by 17 September. (Source: CMA Consults on SME Banking Referral)