Small UK business owners will soon find it easier switching between banks, thanks to changes to banking competition rules due next year.
The Competition and Markets Authority (CMA) has accepted a pledge from Bacs Payment Schemes Ltd (Bacs) – the service provider of most automated UK payment methods, including direct debit and credit – that it will implement improvements to make the retail banking market more competitive following a 2016 CMA investigation.
To overcome concerns about switching banks and to give assurance to account holders, a crucial measure for small firms will be the extension of the redirection service managed by the Current Account Switch Service (CASS).
Set up in 2013 to make switching current accounts a simpler and more reliable process for consumers and small businesses, CASS aims to increase competition between high street banks and encourage greater choice for customers when choosing between lenders.
A key CMA recommendation was that the process of bank account switching in the UK be made more independent. When once previously managed by the banks it represented, CASS now has an independent chair person in place to guarantee the service works in the interests of customers.
Consumer groups and price comparison sites, as well as lenders, will from now on be able to influence how CASS operates and promotes itself.
The CMA investigation also revealed that just 4 per cent of UK business owners currently decide to switch banks in any given year, despite the prospect of being able to save an average of £80 a year in fees by doing so.
Welcoming the prospective changes, chair of the CMA retail baking market investigation, Alasdair Smith, said: “Improvements to the switching service will give customers better information about, and so greater control over, their finances. This in turn will make it easier to move money and capitalise on better offers.”
The CMA made a total of 17 recommendations to Bacs that it has said will save bank customers between £700m and £1bn over the next five years.
Smith added: “Switching is the key way for people and small firms to find better banking deals and save. Our investigation demanded that banks worked harder for their customers.”
Banks fail to offer sufficient financial advice to small business owners
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