/ Money

Why are banks still failing to prioritise their customers?

Overdrawn

Last Tuesday, I appeared before the House of Commons’ Treasury Select Committee to give evidence on the Competition and Markets Authority’s banking inquiry.

Alongside me were representatives from Atom Bank and Tesco Bank, and it soon became clear it isn’t just Which? who feels the Competition and Markets Authority’s [CMA] work fell short.

Why does it matter?

As previously mentioned, Which? is concerned that the CMA failed in its report to go far enough. It’s long been clear that the banking sector isn’t competitive enough, resulting in poor outcomes for consumers, so seeing the CMA going through a long and detailed investigation, only to provide seemingly rushed remedies, is a real problem.

This issue became clear multiple times in the session with the MPs digging in to issues around unauthorised overdrafts, free-if-in-credit accounts and switching, among others.

Unauthorised overdrafts are a key area of concern for Which?, with some banks charging four times as much for an unauthorised overdraft than a payday loan, raising the sector funds of over £1bn per annum.

In a clear shortcoming, the CMA has simply suggested that banks cap unauthorised overdrafts to a level they themselves can set. A clear example of marking your own homework if ever there was.

What can be done?

Of course, spotting the problem is only one part of it, and there was a real appetite in the committee to find solutions for the problems the CMA had failed to address.

For unauthorised overdrafts, the ball has been dropped, but a real opportunity lies in the Financial Conduct Authority’s [FCA] upcoming review of the pay day loan cap, which is due to take place in January.

Happily, the committee were keen to understand what role they could play, and there certainly is a need for a strong voice in Parliament to support the FCA taking on this work and finding effective remedies.


Stepping closer to better banks

Such issues do have to been seen against a back drop of overall change in banking. For too long banks have done what they have to do, rather than what they should do. Changing this will take time, but hopefully by tackling one issue at a time, and using sessions such as this one to shine a light on what still needs to change, we can get a better market with real options for consumers.

What more do you think can be done to improve banking?

Comments
Guest
Amanda Key says:
5 November 2016

Banks are using antiquated laws to fleece their customers and the Government are letting them getting away with it. Remember the Banking Industry needs or us more than we need them and “Floor Boards” and “Mattress” spring to mind!

Guest

Quite so Amanda. Due to these “antiquated laws” it is easier for us to drop our bank than for our bank to drop us – they don’t have a contractual headlock on us like the other companies that supply us with services.

Guest

Sky News announce UK banks are weighing up revolutionary digitised cards to fight online fraud.

Gemalto who are developing a version of the card claims the technology will make it virtually impossible for fraudsters to steal a customers bank card details and use them to make purchases on the victims account.

See: news.sky.com – UK banks weigh up using revolutionary digitised cards to fight online fraud.

Guest

I think this would be a very effective counter-measure and probably popular. Presumably the internal battery will last a reasonable period before a new card is required. It has always concerned me that we have to give the security number on credit and debit cards when ordering something over the telephone where there is no encryption system in place. So much crime starts on the inside of companies and this development should thwart much of that.

In the same article I read that – with Cyber Monday coming up – “Police are warning on-line shoppers to be extra careful, as many promising-looking bargains on the web are simply criminal deceptions aimed at tricking people into entering sensitive bank card details, which will then be used to commit fraud“.

Guest
Jason Bourne says:
1 December 2016

The banks should be prevented from making extortionate charges particularly when their interest rates for savers are beyond a joke, we can punish them by moving our business.