A review in to retail banking has recommended a number of changes to the way customers bank in the UK.
The Competition and Markets Authority (CMA) investigation outlined a number of key changes that include:
- Banks being required to send alerts to customers going into an unarranged overdraft, and inform them of a grace period. The aim being to help them avoid charges
- The introduction of Open Banking – making it easier and clearer to compare products and exchange data between banks
- A requirement from banks to send information to customers at key times. This includes prompts about their local bank closing or to review if they are getting value for money from the bank.
“The reforms we have announced today will shake up retail banking for years to come, and ensure that both personal customers and small businesses get a better deal from their banks.”
Alasdair Smith, Chair of the retail banking investigation
The CMA suggests that one of the main reasons behind these recommendations is because the larger banks are not competing hard enough to attract customers. As a result it seems that customers are paying more than they should but not benefitting from any new and improved services.
With the new changes it’s hoped that consumers are encouraged to switch and save money through finding better deals. With the introduction of open banking you’ll be able to upload details of your finances, in to an app or comparison website, which can then show the savings available if you were to switch to another provider.
Banks will also be required to put a ceiling on unarranged monthly overdraft charges. This will be known as a monthly maximum charge (MMC).
“A bank’s MMC will specify a maximum amount that the bank can charge a customer during any given month, taking together all unarranged overdraft charges including debit interest and unpaid items fees that the bank charges. Banks will be required to disclose the MMC associated with each of their accounts, so that customers are fully aware and can use it to compare providers.”
CMA Report, August 2016
The dates currently suggested for the proposals to be implemented range between early 2017 to late 2018.