/ Money

Can the CMA’s banking remedies deliver better banking?

Bank fix

After a near two-year-long probe into the banking sector, the Competition and Markets Authority has today published its proposals to shake up banking. But will it be enough?

The Competition and Markets Authority (CMA) has today recognised that the ‘big four’ banks – Lloyds Banking Group, HSBC, Barclays and Royal Bank of Scotland – dominate the market, and consumers aren’t switching. In summary, the banking sector isn’t working for all consumers, and a shake-up is long overdue. So what’s the CMA’s fix for this?

CMA banking remedies

Broadly speaking, today’s proposals includes some welcome news for the more than 50,000 supporters who’ve backed our Better Banks campaign.

In a win for our campaign, the CMA has laid out plans to ensure banks do more to help people manage their money. We called on the CMA to introduce alerts for overdraft usage and grace periods to help people avoid charges – and the CMA has done just that.

A revolution in mobile banking to promote better and easier switching is the big news from the CMA’s proposals.

The new ‘open banking’ standard will aim to deliver the same services on smartphones as those found in high street branches. Applying for loans, overdrafts and mortgages should all be available via mobile phone, as well as being able to transfer money between accounts.

The aim of this proposal is to pave the way for new services that are better tailored to individual needs – for example, using a mobile phone app to manage accounts held with different providers and compare better deals based on banking usage.

You should be able to access the details of your entire finances through a mobile phone app by 2018. The CMA believes this will encourage more people to switch to better deals, but concerns have been expressed today about potential security issues.

Unarranged overdraft charges

Missing from today’s remedies were strong plans to directly tackle high unarranged overdraft charges.

While the CMA will require banks to set a limit on their charges, the proposal will allow banks to set this limit themselves. It will allow banks to continue to impose charges that can cost as much as a payday loan.

These charges remain problematic for consumers. Last month, we asked you here on Which? Conversation ‘Do you know how much your overdraft fees are?’ The majority told us they didn’t – 45% said ‘No, I have no idea what the cost would be’ and 20% said they weren’t sure. Only 36% said they knew exactly what the charge would be.

As Kim Marie explained to us here on Convo:

‘It’s not always avoidable – my council decided (incorrectly) that we’d been overpaid council tax benefit, they debited the amount they wanted back immediately, sending us overdrawn. It took me weeks to get the money back from them and a refund for my bank charges and compensation. I cancelled my direct debit for them and they now get paid late every month to teach them a lesson!’

Without stronger measures to control unarranged overdraft charges, they could remain at crippling high rates affecting some of the most vulnerable consumers. We want to see the financial regulator to review overdraft charges and crackdown on these punitive fees.

Better banking

Today’s proposals are welcome news, particularly with the steps outlined that aim to give customers better information and an improved switching experience.

However, we maintain that more will need to be done not only to increase competition but also to ensure banks deliver a better service for all customers.

We expect the Financial Conduct Authority to press ahead and implement these changes to help deliver better banking for consumers.

So tell us, what do you think of today’s proposals to shake up the banking sector? Do you think these will be enough?

Nick says:
17 August 2016

I welcome anything that makes banking more accessible, clearer and consumer friendly. I’m not sure how the regulator has determined that all in one app is the answer to this. If for example it is to encourage switching, they are not dealing with the two big issues that put people off. 1) the length of time it takes and 2) the negative impact switching has on your credit file and score.

The fact banks credit score for current accounts (without overdrafts) to issue basic cards and contactless is a real issue, yes banks do offer basic accounts but they still credit check and all this does is make for those struggling the problem worse. On the other hand if you have a good score but switch banks several times, a previously good score will be impacted.

So how’s does an app help? I think the answer is, it doesn’t… What’s really needed is a complete overhaul of personal banking.

Colin Rutherford says:
21 August 2016

I think the one issue not being tackled is banks loyalty to regular / long term good customers . Making it easier to switch is OK, but if the banks looked after there existing long term customers in better ways, maybe most of them would not want to switch in the first place !!! Instead the banks will be allowed to continue to encourage new customers with special offers like low rates, lower charges, interest free periods etc. whilst continuing to penalise their existing customers who have been loyal for many years by charging them more to subsidise or “pay” for all these special offers. And, at the end of the special offer period, the new customers move on to someone else offering a new special offer to new customers while the existing loyal customers “pay” for the cost of the special offers. Credit card companies and Mobile Phone companies are equally as bad!!!


Banks, like other commercial organisations, will arrange their business to maximise profitability (not necessarily meaning excessive, but competing well with their rivals). Existing customers with good track records may be better bets when it comes to loans maybe, but “loyalty” in the sense of sticking with someone even if it is not in your commercial interests really does not exist by and large, and I doubt it ever has. No more than customers are loyal to a provider; lazy or sticky maybe. I have no hesitation in changing energy, breakdown, insurance providers if it benefits me, and if I was not happy with my current bank I would switch.

Alan says:
22 August 2016

Banks and the banking ethos (profit at all cost and over everything else) is inherently flawed and, as we have seen many times, corrupt. The head of Lloydstsb anti-fraud division went to jail for stealing £thousands. No bank can be left to trade without rigorous controls set up and overseen be truly independent bodies – not the FSA, a joke.

Derick Bird says:
23 August 2016

I am a disabled pensioner and bank with Halifax which still operates on a working day to exclude Saturday and Sunday and Bank Holidays. I therefore live weekly from hand to mouth being perpectually overdrawn at £1.00 per day or, if over the agreed limit, £5.00 per day. But Halifax deploy other methods to extra additional costs to their customers where, for instance, weekly pension funds are not credited to the account until 00.01 Monday morning although the bank have received the funds via BACS on the previous Saturday so in theory I am not overdrawn but am still being charged the overdraft fee of either £1 or £5 for Saturday and Sunday. Similarly, always when there is a Bank Holiday, two payments are made together but Halifax withholds one payment until the Friday before the Bank Holiday Monday and therefore charges the additional overdraft fees for five days whilst my pension sits waiting to ve credited to my account. And why take overdraft fees when already overdrawn to over the agreed limit to charge £5.00 per day rather than take the fee when there are sufficient funds in the account to cover the charges? Seems a deliberate ploy to maximise profits!

Trevor Makepeace says:
26 August 2016

For heavens sake, Which! In your latest email about Gloria Hunniford’s account getting raided, you say “It’s a disturbing example of how even savvy people like Gloria can be caught out by fraudsters”. It has NOTHING to do with Gloria Hunniford getting caught out. The fraudster went into a bank branch and convinced counter staff she was Ms Hunniford. It was the BANK STAFF who were duped!! Please, at least try to get facts right.

Paul says:
26 August 2016

I was emailed by which to sign a petition for banks to up their security, after Gloria Huniford lost her life savings.

This to simplistic!

I can’t sign this.

Security is already so complicated for customers that we find it difficult to even log in to an account.

OK, banks could well do with better security in the case sited where a woman walked into a bank posing as another and drained her account.

BUT no security should be added to what customers already have to endure.

Current security is reaching the point of unworkability. If it is too difficult to log into one’s account one may well decide to do without the account.

I’m thinking to stuff the banks by stuffing my mattress!

Al. K says:
26 August 2016

Realising I was subject to a scam, I quickly arranged for 2 banks to put a stop to all transactions. Upon re-organising, Bank 1 was brilliant. To my horror, Bank 2 had merely blocked my debit card, leaving my wife’s card and everything else in use! Not impressed.