Two years on from its relaunch as an independent brand, the bank is urging on the Competition and Markets Authority’s (CMA) to use its ongoing investigation into banking to fix the industry to benefit consumers.

In a report entitled ‘Competition Matters’, TSB has identified key barriers to competition and proposed four changes to make the market more competitive.

TSB believes all banks individually restrict consumers’ ability to make informed choices about the best products and services for them and have collectively created a market stacked against consumers.

In particular, TSB highlights a lack of transparency around what consumers are actually paying for their day-to-day banking. While maintaining the illusion that banking – in particular current accounts – are ‘free’, banks make it difficult for consumers to understand how much they pay for their bank account and whether they might be able to get a better deal elsewhere.

Despite many new entrants to the sector over the past decade, challenger banks (excluding TSB) have collectively secured just over 1 per cent of the main bank account market since launch. The Big Four maintain dominant, accounting for over 85 per cent of all UK bank accounts.

In its report, TSB says despite the introduction of the Current Account Switch Service (CASS) two years ago, only 2 per cent of people switched their bank account using CASS last year. This is evidence the switching service is not working for all consumers, especially for those who would benefit most from switching, such as overdraft users.

The report notes banking is the only consumer industry in which standardised monthly bills aren’t sent to consumers.

TSB has suggested four simple changes to the CMA they believe will expose banking to real competition and therefore ensure the industry starts working for consumers.

1. All banks should disclose to each of their customers how much they have paid for their banking each month, in the form of a monthly bill.
2. The industry should create a solution that makes switching a credible option for all consumers, particularly overdraft users. This would include a requirement for each customer to be able to request a standard format ‘credit passport’ which they can take to their prospective new bank.
3. All banks should be required to promote the existence of the enhanced switching service to customers, explaining how switching is easy and how the cost of switching is underwritten by banks themselves.
4. Regulators must promote competition as the only real way to make the market work for consumers.

“Only real competition has the potential to fix the culture in UK banking,” said Paul Pester, TSB chief executive officer.

“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.”