Switch your bank account ‘and save £260’

The CMA’s preliminary report pulls many of its punches – even if it acknowledges that a few problems exist in the business banking market. Many don’t realise their “free” current account isn’t actually free.

Another suggestion is increased advertising of the switching guarantee.

If you’re accepted ask them to use the Current Account Switching Service.

The personal current account market generates revenues of more than £8 billion, while the CMA’s investigation into SME banking includes more than £2 billion of business current account market and business loans.

The decision removes one regulatory risk for Lloyds, which has the largest share of current accounts.

“We want the CMA and regulators to focus on measures that help challenger banks scale-up, by levelling the playing field on the cost of capital, whilst helping to publicise the switching service”, Fell concluded.

Just 3% of bank customers switched in 2014, the investigation found, with 57% of consumers remaining loyal to the same provider for more than 10 years. For those of us who regularly dip into our overdrafts, this could be worth up to £260 a year, it said.

“Virgin Money is always pushing for greater competition in the banking market and a better deal for consumers and we will continue to engage with the CMA over the next six months”. We now have several credible challenger banks, a burgeoning fintech sector and a switching service better than most markets. But, perhaps surprisingly, the issue isn’t monopolistic banks throwing up walls to stop customers leaving – it’s lazy account holders. It is important that any new remedies are really effective, so the CMA will be testing its proposals carefully.

– Requiring banks to prompt customers to review the service they receive from their bank through receiving individual messages at certain “trigger points”. The Midata service lets you access your banking history at the click of a button and input that data into a comparison site to work out exactly which account would offer you best value for money.

Banks now make up to £8billion a year from current accounts via “hidden” fees such as overdrafts and worldwide transfers. An improved Midata could have a radical impact on consumer choice in retail banking markets.

Improve information sharing between credit referencing agencies, banks and financial advisers to make it easier for SMEs to shop around for business loans.

The Competition and Markets Authority (CMA) instead recommended measures to make it easier for Britons to compare the full costs of accounts, telling banks on Thursday to provide clearer information.

Alasdair Smith, head of the Competition and Markets Authority, said: “What’s needed is a change in banks’ behaviour”.

“We think customers need to be put in charge of their banking”.

Despite discouraging findings for small business banking, the investigation did point to positive developments such as new companies entering the small business banking industry and more innovative products becoming available for online and mobile banking. In reality, consumers are paying for their bank accounts, through borrowing charges and foregone interest on their balances that they could have made by moving to another bank or building society.

The CMA will now discuss its findings and any possible remedies ahead of publishing its final report in May 2016.

The CMA pointed to a number of potential changes to the £16 billion personal and small business account market.