Today we call on the Competition and Markets Authority (CMA) to refer the current account market for a full competition inquiry. The unhealthy dominance of the biggest banks needs to end.
In September 2013, the industry-backed Payments Council launched the new personal current account switching service. At the time they hailed it as ‘the beginning of a new era for competition and consumer choice in the current account market’.
Six months on from these bold words and the new personal current account switching guarantee service has seen just 2% of people have switched accounts. And we’ve calculated that even if the numbers of people switching continues to grow at the same rate as recent Payments Council data suggests, only 4.2% of people will switch accounts this year.
Furthermore, the major six banks still having an unhealthy stranglehold on the market. There is little sign of new players entering the market and offering something genuinely different, and all the while consumer confidence in bank remains desperately low.
Full competition inquiry
That is why today we have called for the competition regulator – the Competition and Markets Authority – to take action now.
We’ve all had to endure the ‘wait and see’ attitude for long enough and little has changed. We want the CMA to take a hard look at the personal current account market and measure it against the following seven tests.
Seven Which? tests of a competitive banking market that works for consumers:
1. Are firms competing genuinely with better quality, innovative products or are they exploiting consumers’ behaviour?
2. Are consumers getting a choice of products which meet their needs and offer value for money?
3. Is there enough clear information about the product for consumers to compare easily?
4. Are there enough engaged consumers to drive competitive pressure?
5. Do consumers have everything they need to drive competitive pressure – are there barriers to switching?
6. Are consumers able to get quick and fair redress when things go wrong?
7. Are new firms which offer a better deal to consumers able to enter the market and compete on a level playing field?
If the market fails these tests, the CMA should refer the industry for a full competition investigation this year. Isn’t it time we all got a better deal from our current accounts?