We are now just days away from an announcement that could put customers in control of their banking at last.
The Competition and Markets Authority (CMA) is in the middle of an investigation into the banking industry and has a golden opportunity to fix the industry to benefit consumers. It must seize the moment and break the stranglehold of the big banks
But why is it so important?
UK banking is not competitive and attempts to improve competition have not gone far enough; banking is not working in the interest of consumers.
We should all know how much we pay for our banking each month. We should get a standard format monthly bill from our bank, like we do from our gas or electricity supplier. We should be able to compare costs and benefits of different bank accounts easily. We deserve a switching service that is flexible and meets our needs. For example, you might want to switch your overdraft and you may not want to close your existing account.
There needs to be change and TSB is leading the charge. We're calling on the CMA to make banking better for all consumers - so that we can all make informed choices about our banking and so that ultimately consumers can be in control at last.
The market needs to start working better for consumers, and not just for the banks that serve them.
Big banks have control of the banking system and a look at the numbers illustrates the point. The big five banks control over 85% of the market.
Much has been made of the number of new banks that have entered the market over recent years, of which TSB has been the largest, now holding 4.4% of the bank account market. But when you look at how successful other challenger banks have been at opening new accounts, the figures are less positive. Collectively, all of the other new entrants to the market in the past decade have secured a little over 1% of UK main bank accounts.
So what do we think we can do about this? We have suggested four simple changes to the CMA that we believe will help make banking better for all UK consumers.
- All banks should disclose to each of their customers how much they've paid for their banking each month. This should be delivered through a standard format "monthly bill".
- The industry needs to create a solution that means switching is a credible option for all customers, particularly overdraft users. This should include a requirement for each customer to be able to request a standard format "credit passport" which they can take to their potential new bank.
- All banks should be required to further promote the existence of the enhanced switching service to customers - explaining how switching it easy and how the cost of switching is underwritten by the big banks.
- The UK regulators must use their extensive competition powers relentlessly to promote competition as the only real way to make the market work for consumers.
We believe only real competition has the potential to fix the culture in UK.
In a truly competitive market, consumers will be offered genuine choice and a level of transparency they've never seen before, so they can make informed choices and switch with ease. Only then will we see customers genuinely voting with their feet.
We look forward to the outcome of the Competition and Markets Authority's investigation into the sector. The CMA has a golden opportunity to expose UK banking to the full force of competition putting consumers in control at last.
To read more about why Competition Matters take a look at our new report.