The Competition and Markets Authority, CMA, said banks had been able to “sit back and take their existing customers for granted”.
An investigation into the dominance of the big banks suggested some with larger market shares offered more expensive and lower quality services, but more than half of customers had been with the same bank for over 10 years and over a third for over 20.
Customers were not flocking to cheaper and better alternatives at the rate that would be expected in a well-functioning market, the CMA found.
The watchdog, which will publish a final report into its investigation into the £16bn current account and business banking sectors next April, suggests requiring banks to prompt customers to review the service they are getting at “trigger points” – such as when their overdraft charges change.
But consumer campaigners and challenger banks have said the proposals do not go far enough. The CMA stopped short of forcing a break-up of the banks, saying a lack of switching was the underlying problem. It has also provisionally decided not to bring an end to “free” if in credit current accounts, which account for around three-quarters of current accounts. In reality, consumers do pay for them through overdraft charges and foregone interest.
Full content: The Guardian
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