Lending

MPs criticise CMA for being “lazy” and “passing the buck” with its bank inquiry

Rebecca Smith | 5 November 2015 | 8 years ago

The CMA's final report will be revealed next summer
The CMA’s final report will be revealed next summer
The Treasury Select Committee has criticised the Competition and Markets Authority (CMA) for its inquiry into the banking market, accusingthe man leading the inquiry of being lazy? and “passing the buck”.

Alasdair Smith, inquiry chair at the CMA, was repeatedly asked to say how much consumers actually pay for purportedly free bank accounts, with customers often foregoing credit interest.

While Smith knew how much his own account cost, he struggled to provide the MPs with any figures for other consumers.

Conservative MP and committee member Mark Garnier said the answers Smith was coming up with appear to be lazy.

you haven’t challenged the banks to come up with the costs. You have had the wool pulled over your eyes, he added.

The CMA has been studying the market to assess why so few customers switch banks, with a recent declaration that banks should encourage customers to switch to a rival whenever a special offer runs out, the customer racks up unauthorised overdraft charges or the bank’s systems crash for a while.

Garnier said: You haven’t gone in to look at this in any proper way and you haven’t challenged banks to come up with a justification for their costs and to come back and answer the question, why do you not simply tell people how much you are being charged

MPs raised concerns that banks made money from customers without much money, who regularly go into their overdrafts and use those fees to subsidise accounts for better-off customers who do not need their overdraft.

Smith said it was very complex to work out the sums for different banks and different types of customer. Instead, he tried to focus on ways to make it easier for customers to find a better value account and move on.

SNP MP George Kerevan meanwhile, accused Smith of passing the buck? for failing to investigate the anti-competitive effects of the big banks owning the payments system and charging smaller competitors to access the basic financial infrastructure.

Smith said the new Payments System Regulator should be the only watchdog to study that part of the industry.

He said that the CMA, which is due to reveal a final report next summer, would consider all possible routes.

Discussing the difficulties challenger banks feel they face, the CMA said it would work harder to address their concerns, such as the eight per cent corporation tax surcharge brought about by the Summer Budget hitting banks with profits of more than 25m.

Smith said: We will take our time and consider the evidence before making a decision on it? we will comment on whether the bank surcharge is a barrier to entry in our final report.

If the CMA decided it was, we’ll have some strong things to say about it? he concluded.

Topic

Lending

Related Topics

What is Debt Financing?
14 August 2023

What is Debt Financing?

Read More →
How to Get a Business Loan
22 November 2022

How to Get a Business Loan

Read More →
What Are Bridging Loans?
16 November 2022

What Are Bridging Loans?

Read More →
What Is A Bridging Loan?
30 March 2022

What Is A Bridging Loan?

Read More →
Six reasons to use an independent broker for business borrowing
8 April 2021

Six reasons to use an independent broker for business borrowing

Read More →
Bounce Back Loans Scheme opens for smallest UK businesses
4 May 2020

Bounce Back Loans Scheme opens for smallest UK businesses

Read More →

If you enjoy reading our articles,
why not sign up for our newsletter?

We commit to just delivering high-quality material that is specially crafted for our audience.

Join Our Newsletter