CITY watchdog the Financial Conduct Authority (FCA) has unveiled proposals for banks and other financial institutions who offer personal and business current accounts to be more transparent – a move it says would help customers make better comparisons between the accounts on offer.
The FCA proposals say current account providers should publish information about how long it takes to open an account, the length of time required to replace a lost, stolen or stopped debit card and the number and type of major operational or security incidents.
It also wants them to reveal how long it takes to give someone access to a personal current account under power of attorney, how and when customers can carry out various transactions – including making payments or cancelling a cheque – and whether 24-hour help is available.
The regulator said its proposals would make it easier for customers and comparison services to access and compare products, and would allow customers to make more informed choices when signing up for services.
It also sees the plans as an opportunity to drive increased competition between financial institutions and in turn, see an improvement in customer care and service quality.
The FCA said it works to promote competition and consumer protection in the retail banking market and this represented one strand of a broader programme of work considering it.
This included action on five recommendations made to the FCA by the Competition and Markets Authority (CMA) in its market investigation report into retail banking last year, including operational performance metrics – the subject of this consultation.
In August, the CMA’s final findings noted: “The older and larger banks, which still account for the large majority of the retail banking market, do not have to work hard enough to win and retain customers and it is difficult for new and smaller providers to attract customers.
“These failings are having a pronounced effect on certain groups of customers, particularly overdraft users and smaller businesses.”
The CMA outlined a package of remedies that aimed to promote more effective competition through increased consumer engagement and activity.
They include several “foundation measures”, among them the introduction of an Open Banking standard to share data, as well as other measures specifically directed to certain aspects of the market: switching of current accounts, personal current overdrafts and the needs of small businesses.
Christopher Woolard, the FCA’s executive director of strategy and competition, said: “Customers tell us they think ‘all banks are the same’ and so they are discouraged from looking for current accounts offering better performance.
“We know from our consumer research and the CMA’s report that consumers and small businesses are really interested to know about the service their bank or building society offers compared to other firms.
“These proposals represent a step forward, making it easier for consumers to judge whether their bank is offering good service and for firms to see if they are competing effectively against other providers.”
The FCA said performance should be measured quarterly from next April, and be published within six weeks of the end of the quarter, and service availability information should also be kept up to date.
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