/ 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?


The questionnaire did not me an option re which bank I use and feel such questionnaires can be limited.

To CA. Yes it did. You obviously skated over it,short as it was.

Julie says:
9 August 2016

there was an option to say which bank you were with!

It did not give an option for more than one, I bank with three!

What questionnaire? I honestly cannot see one. I am using Firefox and have turned off all browsing protections but cannot see any questions. I do have a poll re farm brands in a side panel.

“What questionnaire? I honestly cannot see one. I am using Firefox and have turned off all browsing protections but cannot see any questions. I do have a poll re farm brands in a side panel.”

Same here – whether I use Chrome, Chromium or Firefox (on Linux , of course).

My reason for not switching is that I’m perfectly happy with the service I receive from my bank.

Me too!

I would think many people are perfectly happy, maybe Which? should do a poll (“if you haven’t switched bank, why ?”) with so many offering a comment you’d have a reasonable target audience

Whatever happens the end result is very nearly always the same. Any board or institution set up is biased towards the companies they are supposed to be monitoring. If they are not financed by businesses with a vested interest, they are financed by the Establishment. Either way, the consumer loses!
Banking and Business will never be transparent in this country, they love the small print far too much for them to change their habitual scheming, in an effort to lighten our pockets by any means possible.

Precisely, just window dressing. The politican elite are so wedded to the financial sector that nothing meaningful will be allowed to happen that adversely affects the interests of the top 1%.

I think it is worse than that. These independent monitoring institutions simply do not attract the best talent. So whenever a proposal is put forward to do something (inevitably that the Banks don’t want) it goes out to consultation with the Banks and surprise, surprise, the talent at the banks comes back with 20,000 reasons as to why it would be impractical. Overwhelmed by this, and unable to see the wood for the trees, and lacking in depth knowledge of computer based banking systems (and of course they are all computer based) the independent monitoring institution softens up on the original proposal, or cops out altogether.

It seems to me that this will never change until the independent monitoring institutions are structured differently, and go about policy making/regulation forming, differently. Frankly, they need less permanent staff, budgets which will allow them to hire in necessary technical expertise on a temporary basis, no consultation with the Banks before they implement a policy/regulation, but instead it should be implemented on a 6-month trial basis during which the Banks are obliged to fix their systems to adjust to the new policy/regulation, after which the penalties kick in.

Like everything else I always feel safer with the devil I know than the one I don’t, except when it comes to BT, British Gas, Abbey National (Santander) and Barclays.
But I’ve never had a problem with Nat West in the 15 years since they took me on after 30 years of Barclays hell who were quick to lend umbrellas when the sun was shining but even quicker to snatch them back at the first sign of rain!

Geoffrey Baskerville says:
9 August 2016

The current proposals may indeed by good for stimulating competition in trading among banks, which is what market regulation in finance might be expected to do. But they do not explicitly ban exploitation or abuse of bank-customer relations which is what is needed to address the exorbitant fees issue. In that respect banks act like a cartel: one extracts extra high fees and so they all do, suggesting it is a fact of life of the business or that it stimulates responsible behaviour. In reality we all know exactly how unpredictable and thorny life can be in ways not of one’s own making, though it is this vereyday world which the banks so often cynically exploit. So regarding fees, the relevant authorities – which may need to be different authorities with different remits – shouldn’t ask banks for cooperation and pussy-foot round them: they should tell explicitly them how things on extra fees will be and brook no argument. That would be real and publicly beneficial regulation for all.

The major problem is that you need very deep pockets indeed to bring an action against them.
They know this and play to this tune.

I’m very pleased with the way my bank operates for me. Why are we looking for ways to protect people that cannot manage their own budgets? Surely, and simply, if you slip into overdraft you are spending more than your income.
If we urge the banks to protect these people, then those of us that can apply logic and manage our income/outgoings will end up paying for those that can’t.
Drop this campaign please . It’s rather negative.

“Surely and simply, if you slip into overdraft you are spending more than your income.”

You can’t just presume that people in overdraft are irresponsible and generally or purposely spend more than their income, as you imply. It is not as cut and dry as you make it sound. Often payments you expect to go in are delayed a couple days for a variety of reasons, while your direct debits are going out right on time! As my husband and I are both self-employed, we are often waiting for payments that were due on a Friday, but don’t come in until Tuesday and Wednesday – or sometimes even weeks later! – while we listen to every excuse in the book for the delay. (Funny enough, these delays are almost always from the wealthiest of our clients. I guess they can’t “apply logic and managed (their) income”.)

Also, people who live on a very limited income, like my brother-in-law, cannot afford the overdraft fees when these minor delays in income happen. Telling Which to “drop this campaign” which would benefit the poorer citizens of the UK sounds like British snobbery at its finest. Do you know that in a recent survey 5 million UK citizens could not lay their hands on £500 in case of an emergency? The majority of these people are working people. So if their boiler breaks, for example, they may find themselves in overdraft for a short period. Then they will be surprised to find that every time the bank writes to them they are being charged £25. I’m very glad, however, that you are so clever and never short of money so this problem doesn’t affect you, but you should not be oblivious to the facts or to the plight of people who are not as wealthy as you.

Coleen, if, from time to time, you have the situation you describe where payments in are sometimes are delayed and create a deficit for a short time. why not arrange an overdraft facility to cover for this eventuality?

For people who are creditworthy, an arranged overdraft will avoid the fees otherwise charged.

Malcolm, My husband and I have an overdraft facility on our joint account and on his business account. However, I wasn’t granted one on my business account because I’ve only recently gained citizenship so I haven’t built a credit history on my own in this country, and they won’t consider my excellent credit history in the USA. My brother-in-law wasn’t allowed one because of his past credit. He has always been just marginally employed. For him, £25 is a week’s worth of groceries. The overdraft fees really hurt him.

Coleen, thanks. I presume if you are a new business in the UK you will need to demonstrate a viable operation before your bank will be able to assess its financial risk.

I don’t know how to help your brother in law, but if he has a bad credit history it is understandable if the bank is reluctant to lend him money he may not repay (which is what an overdraft is, of course). I believe it is the state’s job to help people in genuine financial shortfall.

Not sure if this is the same with all banks but Natwest charge me if I go overdrawn with an arranged overdraft – there are charges for everything, so I cannot avoid bank charges unless I remain in credit at all times – not always possible to do that.

Given that banks can create as much money as they like in the form of new loans I’m not going to be happy until these fees are scrapped or dropped down to meaningful values. Banks rake in tons of cash, they effectively have a licence to create digital money and then charge you for the privilege. It’s about time this was sorted out properly.


I am of the older generation and the thought of doing everything by mobile scares me , I would not trust it & have no intention of ever using it , it is too open for scams .

I agree entirely. Having a single phone apps that can access all of a customer’s savings and other money would be a god send for any hacker smart enough to crack its security or scam its user.

The Banks will still ensure full control and their customers will always have to dance to their tune. They are arrogant institutions – note their rejection of the Bank of England’s interest rate cut! What is needed is a State Controlled Bank which will carry out the wishes of Government and treat their customers as KING!

I guess that one can blame that on former chancellor of OUR exchequer, gordon brown, who handed the responsiblity to MANAGE our finances BACK to the bank of ‘england’: thereby alleviating ANY chance of supposed ‘governMENTAL oversight’. Which is WHY depositers are receiving such low interest on their ‘savings’: but has NOT drawn in the EXCESSIVE profiteering PIRACY of the stock market or reigned in the exhorbitant salary increases of so-called ‘top’ executives.

Unauthorised overdraft fees exorbitant. With BoE base rate at 0.25% how can AUTHORISED overdraft fees remain at levels above credit card interest payments ?

RBS has reserved the right to charge negative interest, that is interest on (business) account balances. I believe NatWest are also threatening the same.
I instructed RBS to close my account within 24 hours of receipt of the notice. This is the only language the banks understand.

Shirley says:
9 August 2016

I am happy with the service I receive from HSBC

Can’t really grumble about my bank, (Lloyds) although I went through a very rocky patch about 40yr ago. I would be reluctant to change now. So long as there is a branch nearby and I can go and speak to someone face to face about my affairs, i’m content to stay with them. The staff at my local branch were very helpful about 5 years ago when someone withdrew a LOT of money from my account, probably by getting my PIN from a cashpoint. The Bank restored the money and helped me set up improved way of managing my account to avoid similar happening again. I just wish they were more into ethical investments. I do feel for people who have bad experiences with their Banks.

Eddie D'Sa says:
9 August 2016

Why do banks charge so much for overdrafts?
There should be no charge for smaller amounts and shorter periods

ASC says:
9 August 2016

More than one bank uses me but option only allows one

FirstDirect (yes a subsidiary of HSBC) – can’t fault them and been with them since 1991, a few years after they started. Can’t fault them, always happy for the phone call and I’ve never had problems. I think all those customers of FirstDirect pretty much say the same, and of course won Which?’s 2015 Customer Service award.

I keep noting that they have won Which awards and continue to wonder why. I have just set in motion closure of my account with them following a 2 year trial.

Which? Recommended Provider:
Current accounts: must have at least one top-ten account for credit interest, overdrafts or current account mortgages.
Savings accounts: must have at least one top-ten instant access or fixed rate savings account which isn’t tied to any other product, is nationally available and places no limits on withdrawals within its instant access accounts.
Customer service: based on a 6 monthly survey of thousands of customers.

First Direct are one such. Which? says “the cheapest overdraft…..Customers love its UK based call centre with no automated systems.” I’m not sure I’d place a call centre at the top of my list; a good and helpful branch is of more use in my view. I’m with Nationwide and am happy with what they provide.

It concerns me that they are encouraging the use of Mobile phones for banking. They are just not secure and we hear of more scams every week. What planet are these clowns on, and I am amazed that “Which” seems not to have criticised this.

Diana Davies says:
9 August 2016

My dad is in his eights, my mum in her seventies and neither one are comfortable with using computers or mobile phones, and my bank account has been hacked twice in the last two months , how do you convince them that these options are safe to use

Agreed. But the younger generation seem to be permanently plumbed into their mobile phones so the Banks seem to think that it is the way to get more business. So they then dumb down their banking systems to work on mobile phones, often to the disadvantage of those who prefer to do their banking from home, using a PC, but then end up with a watered down, lowest common denominator, “mobile friendly”, system as a result.

Have to laugh at the concept of plumbing and watering down, when I know of several people who dropped their phones down the loo, put in the washing machine, etc. What good is your banking app then?

The solution to high fees for unarranged overdrafts is to …..arrange an overdraft facility if you might need to go overdrawn. If you are a good risk your bank will give the facility. If you are a poor risk they won’t – because the may assume you cannot readily repay. Why should they take that risk without making a charge?

Would you prefer for poor risks, or those who have not thought to arrange an overdraft, that the bank refuses any withdrawal or payment that would take you overdrawn? Already there are reasonable improvements – texting you as soon as you go overdrawn to allow you to put money into your account, a period of grace before charges are incurred, and a cap on monthly fees.

Diana Davies says:
9 August 2016

Banks are greedy. They want the maximum profit for the least amount of trouble. They shut down branches without any regard for the elderly in communities , thinking they all use internet and other types of banking.