CMA Open consultation: Personal current accounts and banking services to SMEs

[Legal Beagles]

We are seeking views on the CMA’s provisional decision to make a market investigation reference in relation to PCAs and SME banking.

More...

Documents




PCAs and banking services to SMEs: provisional decision on MIR PDF, 601KB, 56 pages





This consultation invites views on the Competition and Markets Authority’s (CMA) provisional decision to make a market investigation reference (MIR) in relation to the provision of personal current accounts (PCAs) and the provision of banking services to small and medium-sized enterprises (SMEs) in the UK.



The CMA’s two market studies on PCAs and SME banking are available on the PCA and SME banking case page.



The CMA will carefully consider the responses to this consultation and announce its final decision in autumn 2014.


Ways to respond


Email to:retailbanking.study@cma.gsi.gov.ukWrite to:Retail banking study
Victoria House
Southampton Row
London WC1B 4AD

[EXC]

Re: Open consultation: Personal current accounts and banking services to SMEs

I'm making a list of stand out elements to include in the Beagles response in addition to the obvious ones like complexity of charging structures etc:

*FoI stats on charges scenario hits that demonstrate consumer disinterest in comparing them

*OFT update doc that shows banks aren't interested in showing them and as such aren't interested in competing on price

*FoI stats on MAS table hits

Addressing the point in the consultation which asks the question why only 3% of people switch it occurred to me that a significant proportion of accounts holders are excluded from switching because they are overdrawn and cannot close their account.

I can't put a definitive figure on the percentage of those affected because the OFT PCA Market Study doesn't give an overall figure as to how many people are overdrawn at any one time but it does give other figures that we might be able to piece it together from ie:

32% of all active accounts went into arranged overdraft at some point during the course of the year and 27% of those are permanently overdrawn. Add to that whatever the figures are for those who are in unarranged overdraft then I reckon it could as much as between 25% to 30% of account holders are excluded from the switching process at any one time.

I can't find any reference in the PCA Market Study to not being able to close your account when in debit or any reference anywhere that links it to low switching numbers so hopefully we might have a bit of an exclusive.

[FlamingParrot]

Re: Open consultation: Personal current accounts and banking services to SMEs

I'm making a list of stand out elements to include in the Beagles response in addition to the obvious ones like complexity of charging structures etc:

*FoI stats on charges scenario hits that demonstrate consumer disinterest in comparing them

*OFT update doc that shows banks aren't interested in showing them and as such aren't interested in competing on price

*FoI stats on MAS table hits

Addressing the point in the consultation which asks the question why only 3% of people switch it occurred to me that a significant proportion of accounts holders are excluded from switching because they are overdrawn and cannot close their account.

In some cases, it could be because of their credit records. You could manage to open an account with another bank, but they may not give you an overdraft facility if you have defaults. If you are unemployed and/or on benefits, a new bank wouldn't offer you an O/D, but you can still use the facility on your existing account. I know someone who has a rather large default and who has been on benefits over 50% of the time since 2008, but still has a decent O/D with Santander. :grin:

A couple of years ago, I looked into switching my business account from Barclays to Santander where I have my personal accounts and who were offering free business banking, because I was unhappy with the charges from Barclays. :mad2: :mad2: :mad2: I made an appointment just to discuss things, knowing I'd still have to produce incorporation documents and signature from the other director and company secretary, etc. The young banker said we could start the ball rolling and logged on to his computer. :typing: When he mentioned director credit checks, :scared: I said the other director was in Beijing (which was true as he works there half the year) and we'd have to wait till he was back. He then said we could start with me, at which point I looked at my watch and said my lunch hour was over and I had to go. :bolt: I still have my business account with Barclays. :ohwell:

[EXC]

Re: Open consultation: Personal current accounts and banking services to SMEs

Don't talk to me about opening business accounts where your partners are located far away.

But you raise a good point in that unlike choosing to switch your electricity provider, bank accounts are really credit products that one has to speculatively apply for and hope for the best.

[Amethyst]

Re: Open consultation: Personal current accounts and banking services to SMEs

Response to this needs to go in by 17th September so we need to get a chivvy on if anyone wants to contribute further?

[PAWS]

Re: CMA Open consultation: Personal current accounts and banking services to SMEs

The young banker said we could start the ball rolling and logged on to his computer. :typing: When he mentioned director credit checks, :scared: I

Santander were checking you out but did you know they have 21 unsatisfied CCJs logged on their file worth almost a ¼ of a million quid. :mad2:

[Amethyst]

Re: CMA Open consultation: Personal current accounts and banking services to SMEs

Right - this is due in by Thursday

[Amethyst]

Re: CMA Open consultation: Personal current accounts and banking services to SMEs

A non-exhaustive list of potential remedies as regards PCAs could, for example, include:

 Enhancing the provision of information to customers through improvements to the statements they receive. Examples would be the provision of more standardised information, and the introduction of annual statements. These might enhance transparency and engagement, and so assist customers’ decision-making.


 Requiring banks to make more charges and other provisions transparent and more easily available on their websites, in order to make it easier for customers to understand what individual bank accounts are offering and compare with other accounts.

 Requiring banks who do not already do so to send their customers text alerts to warn them if they are about to go into overdraft. This may assist customers to control their usage of their account so that they only use overdrafts when it is the best way of meeting their needs.

 Requiring banks to offer their customers the option to opt out from overdrafts at no cost in all fee-free accounts.

 Intervening more directly in the conduct of parties, including the prices they may charge for overdrafts.

 Prohibiting certain charges that are particularly complex for customers to assess.

 improving redress mechanisms for complainants.

SME banking

 enhanced information to SMEs setting out BCA costs and usage, to improve the ease with which customers can compare different providers

 introduction of comparison and choice tools, to enable SMEs more readily to perceive differentiation between the offers of various banks

 requiring particular steps to be taken when an SME is sold an SME banking product (for example, a requirement for specific advice), with the aim of ensuring that they are in a position to take a fully informed decision

Other options, applicable to both SMEs and PCAs, could include compulsory access schemes, such as the requirement for incumbent banks to provide competitors (especially new entrants and smaller providers) with access to their branch network or other assets, such as payment systems, or intervening more directly in the conduct of parties, including the charges that they may levy for the focal products or the services that they must provide.

[EXC]

Re: CMA Open consultation: Personal current accounts and banking services to SMEs

...prohibiting 'turkey shoot' clauses that prevent the customer from withdrawing from the contract as per Foster-Burnell judgment.

[Amethyst]

Re: CMA Open consultation: Personal current accounts and banking services to SMEs

Turkey shoot is definitely an expression I haven't heard before, surmising it means trapping you into a situation making your life worse and worse until they shoot you lol.

[EXC]

Re: CMA Open consultation: Personal current accounts and banking services to SMEs

''A turkey shoot is an opportunity for an individual or a party to very easily take advantage of a situation.''