2nd October 2015
Consumer watchdog Which? has called on the competition regulator to widen its inquiry into bank accounts demanding that banks are required to disclose all charges including for overdrafts and potentially offer compensation for poor service.
Which? also says that the Competition and Markets Authority should name and shame the worst bank account providers.
Which? has set out its demands in three categories.
The move comes as Tesco Bank has suggested that the bank accounts are labelled in a traffic light system which would allow customers to choose between the best and worst accounts depending on their circumstances.
Which? says the current investigation into bank accounts needs to be widened, otherwise it risks failing to fix the problems in the market.
It wants the CMA, the watchdog responsible for the probe, to commit to testing a wider range of measures to improve the market.
In its submission to the CMA’s inquiry into Personal Current Accounts, Which? says that at a minimum, Which? wants the regulator to require banks to provide clearer, more transparent information on the cost of accounts, and ensure that consumers can make easy comparisons and switch providers without hassle.
Which? argues that the CMA should overhaul the way that the bank account fees are displayed and communicated to customers.
However, the CMA will have to go further than just looking at just price, because of the sheer number of people who either cannot or will not switch.
Fairness: The CMA should look at forcing banks to more proactively help customers who regularly use an unauthorised overdraft, as well as increasing compensation levels for customers who experience poor service.
Control: The CMA should consider how banks can put people in control of their overdrafts, for example by notifying customers about hitting their current account limits before they go into the red.
Transparency: The CMA should explore how to make more use of information about the behaviour of banks to regularly name and shame the worst providers.
Richard Lloyd, executive director of Which?, says: “We need the CMA to ensure its investigation is focused on reforms that will deliver genuinely better banking services for all consumers.
“With few consumers moving their finances to different providers, and the existing big banks continuing to hold substantial market power, the inquiry must look beyond ideas to improve information and switching.
“When it reports next month the CMA should propose changes that will incentivise banks to better respond to the needs of their customers.”