Skip to main content

Competition watchdog sets out proposals to reform the banking industry

20 May 2016

The Competition and Markets Authority (CMA) has issued proposals for a major reform of the retail banking industry and claimed that, if adopted, its package of measures to improve competition 'could bring benefits to bank customers to the tune of £1 billion over 5 years'.

The provisional conclusions of the CMA’s 18-month study focus on increasing competition between banks in personal current accounts and in banking services for small and medium-sized enterprises (SMEs), and on creating new protections for overdraft users.

Alasdair Smith, Chair of the CMA’s Retail Banking Investigation, said: ‘For too long, banks have been able to sit back and not work hard enough for their personal and small business customers. We believe the strong and innovative package of measures we are proposing will give customers the information and tools they really need to get a better deal out of the banks. They will also protect those who fall into overdraft from being stung with unexpected fees.’

The CMA suggests that banks should be required to set a monthly maximum charge for unarranged overdrafts on personal current accounts, and ensure that customers are automatically signed up for text alerts warning that they are about to go overdrawn, so giving them time to pay money in.

Proposals to increase competition in the industry include:

  • a requirement for banks to prompt customers regularly to check that they are getting good value – for example, if interest rates change
  • introducing a simple app to help customers compare and switch accounts
  • making the price of loans more transparent, to help business customers.

The CMA stopped short of recommending that the largest banks should be broken up, on the grounds that this would not address ‘the fundamental competition problems’ of ‘a lack of transparency on fees and charges’.

Alasdair Smith added: ‘New entrants into a market are an important source of competition and innovation, and we are well aware of the current barriers to challenger banks in UK retail banking.

‘What’s really holding them back is their ability to highlight to customers how new offerings compare with their current deal. Our package of banking reforms will help new competitors get a stronger foothold in a market which is of vital importance to the whole economy.’

The CMA will publish its final report on the retail banking market investigation by 12 August 2016.

100% Client Satisfaction Guarantee

At Arlington we love what we do. As proof of this, our staff will do everything to ensure that you receive the best, most reliable and professional service on the market.


Happy Clients

  • "Arlington offer sound business advice and have helped us to increase our turnover this year, whilst reducing our tax bill."
    Mr J McGillivray JM Yachting Limited.
  • "A big thank you to David and the rest of the team at Arlington. Always friendly and reliable. My accounts are dealt with quickly and efficiently and most importantly accurately. Something that wasn't happening when I was tying to produce them myself."
    Mr A Gilchrist Warrior Contracting Limited
  • "With our company growing, we are always getting into various situations where Arlington Accountants are always happy to offer us advice and guide our business to ensure more profits and lower tax payable".
    A. Elber - Director - Circuit Clubbing
  • "Its important to us to have the same people dealing with our affairs from one year to the next. Arlington Accountants take a very personal approach and offer great money saving advice."
    J Sheen - Director - Hambrook Holiday Park Limited
  • "Give Arlington a call now, you will not be wasting your time. They will improve your tax affairs and help you to change your mindset and lifestyle sooner than you think is possible".
    A. Elber - Director - Circuit Clubbing

View our client testimonials