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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?


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.

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.

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!

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.

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.

Credit card rate jacking is another issue the government ought to put a stop to. Credit card firms should honor the rates given and not be allowed to suddenly (and some do this without any prior notice in my own experience) increase credit card interest rates. This issue is overlooked. A lot of people depend on credit cards to help manage finances and those on lower incomes are the hardest hit to start with, miss out on special deals, 0% offers and lower interest rates. The banks are set on getting more and more profits out of people, and rate jacking is a rip off. I think politicians are afraid to stand up to the corrupt banking industry.

I have struggled with opening a simple bank account. Twice.
For a Charity, which doesn’t generate much income, and therefore HSBC were not interested. After the first appointment, they did not return my calls or emails.
Similarly, trying to set up a new Business Account with Yorkshire Bank. We were told we needed to speak to someone on the phone (rather than the person in the bank, who we had made an appointment with). This was because we needed an Overdraft, just to cover Materials for the first project. But when they called, they were not interested in helping us, unless we had a substantial sum to put into the account to begin with. I did not get chance to say how much income our first project would generate, or even show them the Business Case. They offered an Overdraft after 6 months, but we wont need one by then. So they referred us back to the man in the bank, to just set up an account. Which means more time off work to go and meet him again.
Banks are not providing the simple service, of setting up Bank Accounts, unless they have a lot to gain from it.
Their first priority seems to be to ask who you currently bank with, and get you to change all of your accounts to them.
But I don’t want to do that. I just need to set up a simple bank account!!!

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HSBC are chasing me (a benefit claimant) for £295, less than a day rate for London copywriters, they’ve sold my account to Lowell has any one heard of these guys? So a bank worth multi-billions is persecuting someone who lives on £65 a week, it would be funny where it not utterly grotesque.

Really sorry to hear about that. This is a good website for legal and practical help, lots of people have debts cancelled on a technicality.


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Is it being suggested that there should be a minimum income below which people who incur debt should not be liable to repay it?

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That is not the point, unless you are suggesting that people on low incomes have a right to take money from private companies and not repay it. We have a benefits system designed to help the genuinely needy. Not the bank’s job.

However what we never know are all the circumstances that surround this kind of plight. For example, how did Neil incur this debt, and did he talk to his bank about his financial problems to try to make an “arrangement”? Has he discussed the problem with the benefits provider? It is unlikely the bank has sold his debt without making efforts to resolve it directly (or is it?). So to condemn either side is unfair without more of the facts, i’d suggest.

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Employment is the highest it has been for a long time. However, we do not know the situation, not entitlements. Nor whether he talked to his bank. I would reiterate it is not a bank’s job to distribute benefits to anyone – that is everyone’s money. Everyone’s money in taxes is paid to the state to distribute benefits. So we should be criticising the social security system if this is not being fairly applied.

My experience is that an income of about £65 is typical for anyone currently unemployed and on job seekers allowance. Our welfare system expects that any such people such solve their financial plight by finding a job – but that assumes that suitable jobs are available within the range of a practicable commute.

On such low incomes, it is very hard to make ends meet – and all sorts of unpaid pills will end being passed onto debt collecting companies, as illustrated by Neil’s case.

Anyone who might want to hear more about this, could do a lot worse than to check out the books and blogs written by Jack Monroe.

Another banking rip off is charging for Chaps.

Is it the amount of the CHAPS transfer charge you object to or the prinicple of having to pay anything at all for the service, Peony?

In a property transaction the Clearing House Automated Payments Service [CHAPS] enables your solicitor or conveyancer to transfer the balance of the purchase price [that you have already remitted and is held in their client account or will be met from the proceeds of a sale of your property] to the seller’s solicitor or conveyancer on the day of completion of the property purchase for settlement within the same day. No other system in use in the UK can achieve the same result. It protects both parties as your money is not released until all the ends have been tied up [including any proceeds from a concurrent sale] and the seller does not get access to your money until their property is ready to be conveyed. The service is rapid, executed within the same day so long as instructions are given in time, is extremely reliable, is secure, does not require advance action subject to the buyer’s funds being available, and copes well with a chain of transactions where the money for a purchase may be dependent upon a sale. The current cost is around £40 which in the scale of things seems reasonable to me, especially given the advantages noted above.

While a BACS [Bankers’ Automated Clearing Service ] payment from one account to another can now be done on the same day, and usually for no charge dependent on the customer’s bank, there can be a time delay between the instruction being received and the money transferring. As an automated service it does not have the intervention of senior bank staff at each end of the transfer to check and approve the transfer so any error in amount or account number could delay the transfer or end up with it going to the wrong account-holder as happened recently with a correspondent to Which? Conversation. So the CHAPS process is regarded as being safer and better controlled. Solicitors prefer to use CHAPS but presumably it is possible to instruct them not to although I suspect they would make a charge for using any payment transfer system. The solicitor accepts responsibility for executing the payments and receipts transfers correctly and on time so at the end of the day it might be best for them to decide on the most suitable process.

With the spate of bank frauds being carried out I believe it should be possible to provide a trace on all transactions within the UK and possibly the EU and many other countries.
Take the following example:
With the spate of bank frauds being carried out I believe it should be possible to provide a trace on all transactions within the UK and possibly the EU and many other countries.
Take the following example:
If I transfer funds from my UK bank account to another entity, I have to provide an account number, sort code or IBAN/SWIFT and possibly an account name and/or reference name or number.
The receiving bank is known, anywhere in the world. It credits those cleared funds to the named account. To set up such an account, proof of identity, either personal or company, is required.
If the receiving bank is instructed to pass on those funds, it will need the same account information given above. Other means may be a cash withdrawal or a Bank Draft. If a personal or company cheque is used to withdraw these funds, details of the beneficiaries should be recorded by the bank when the cheques are presented. Cheques drawn against “CASH” should be prohibited. Again proof of the identity of the beneficiary should be known. This proof should be in the form of a government issued document (passport, photo driving licence or photo ID card and the bank should take a record of it) .
It would appear possible to track those funds from my account, through a holding account, to the final account and then to either the recipient of a cash withdrawal, personal cheque or Banker’s Draft.
Funds “diverted” from the intended recipient should be readily traced??????
Have I missed something? Please let me know.
Thank you. Peter Rowe. Witney, Oxfordshire.

I have a feeling that if things were that straightforward the banks would be operating in that way, if only to save themselves the grief and condemnation they receive whenever this subject crops up.

Be careful what you wish for. Certainly cases in the news suggest banks could do more to check the bona fides of destination accounts. Nowadays when opening an account we have t jump throng all sorts of hoops to prove we are who we say we are yet faudsters still manage to open accounts to operate their nefarious activities.

So imagine the restrictions you propose are in place. You owe a friend some money and they give to their account details for you to pay the money into their account. How will you provide satisfactory “proof of the beneficiary” in order for you to pay in the money? Or will your friend have to provide this proof before the money can be credited to his account? Who will pay the costs of this process?

Not only that, but the proposed “government issued document (passport, photo driving licence or photo ID card” could easily be forged by the averagely competent fraudster, so it really resolves nothing.

I sent for slimming tablets from a Dutch company. The trial offer was £8. They took £157 from my account. I phoned BOS immediately then had an interview with a young bank cashier. Her boss over-ruled her and was so rude to me. She didn’t even look at me, she spoke to the young cashier as if I wasn’t there. I have been a customer with BOS since 1982.