You are here: Home - Saving & Banking - News -

Retail banks up for current account review

0
Written by:
13/07/2012
UK banks are set to under-go regulator's review on the way in which they run current accounts for their personal finance consumers.

The Office of Fair Trading has launched a review of the personal current account market and outlined a longer term programme of work aimed at addressing competition concerns and a lack of customer focus across the wider retail banking market.

The OFT will look at whether or not initiatives put in place in 2008 to make the process of switching accounts easier and statement and charges easier to understand.

The review forms part of a wider programme of work designed to achieve a more competitive and customer focused retail banking sector. If enough progress has not been made there is a possibility of the regulator requesting the industry be examined by the Competition Comission.

Claire Hart, OFT Director said: “We committed to keeping the personal current account market under scrutiny following our 2008 study.

Through this review we want to understand what progress banks have made in providing customers with better information about account charges, greater control over their accounts and easier account switching facilities.”

The OFT also intends to consider the operation of payments systems and the banking market for small and medium-sized enterprises, over the next two years.

Hart added: “More generally, we are concerned that a lack of effective competition means the retail banking sector is not working in the interest of customers and businesses. We want to see banks become more customer-focused and this will be the central theme of our programme of work going forward.”

Consumer behaviour will also be scrutinised, as the regulator will look in detail at the way in which consumers make decisions and engage with retail banking services, including through applying behavioural economics.

Kevin Mountford, head of banking at MoneySupermarket, said: “The decision by the OFT to investigate the UK current account market is welcome and comes off the back of the findings of the recent Vickers Report, which made some recommendations to improve competition in the sector. The creation of new switching rules and the auto-redirection of bank account numbers between providers will make the process of switching easier.

“The recent turmoil in the banking sector has shown a desire from consumers to vote with their feet. A recent MoneySupermarket poll showed that a fifth of banking customers have lost trust in their bank as a result and will move elsewhere, so we may be at a tipping point in terms of customers looking at viable alternatives to the big four, who control the majority of the personal current account sector.”

Recently, banks have been embroiled in a series of scandals ranging from rigging the Libor, the rate in which banks lend to each other, to misspelling payment protection insurance. Banks are in the process of paying back £9bn for the latter.

The OFT plans to publish its personal current account review by the end of 2012.

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2191545-canary-wharf
Banks face $22bn in LIBOR penalties – Morgan Stanley

LIBOR rate-rigging penalties and damages to investors could reach $22bn for the 12 global banks involved, according to Morgan Stanley...

Close