FCA steps up action on current accounts
03 November 2016 | 6185 views | 0
The Financial Conduct Authority has set out a series of measures to stimulate competition in the UK's moribund current account market, promising to go above and beyond remedies proposed by the Competition and Markets Authority.
Announcing the plans, Christopher Woolard, executive director of strategy and competition at the FCA, says: “Our role in regulating retail banking markets goes beyond the remedies the CMA has asked us to take forward, and we will continue to look more broadly at how well these markets work, with a particular focus planned on high-cost credit including overdrafts. We will also be looking at wider retail banking business models."
The CMA recommended that the regulator research, test and implement measures to increase consumers’ engagement with their overdraft use and charges. The watchdog says it will also consider the need for rules in relation to the proposed Monthly Maximum Charge (MMC) and will begin to collect data in 2017 in order to do this.
On data sharing between banks and startup providers, the FCA says it will follow recommendation from the CMA by acting as an observer on the Open Bank steering group, which is drafting standards for API implementation by the country's banks.
On measures to encourage current account switching, the FCA says it will set up an expert group to develop models by which banks can publish better comparable information to help consumers make their decisions. Research will also be undertaken to understand which 'prompts' are most likely to help consumers understand their account usage and how much their account costs, and encourage them to consider switching.
The watchdog says it will additionally explore the free-in-credit current account market and its links to overdraft charging.
The FCA's response to the competition authority's tepid rulings has been welcomed by the UK's new breed of challenger banks. Mark Mullen, chief exectuive of Atom Bank, says: "That the FCA feels the need to undertake further investigations into the practices of banks raises questions about the efficacy of the recent CMA investigation into Current Account competition. Why must we continue to wait for years for things to improve? This glacial pace of change is at odds with how customers and taxpayers alike expect to be treated."