Finance Fred Heritage · 17 May 2016
Small firms welcome move to increase retail banking transparency
Small business leaders have welcomed provisional recommendations from the Competition and Markets Authority (CMA) on changes to the retail banking sector. The CMA’s recommendations included changes that would make it easier for the UK’s small business owners to compare banks and switch more easily to get a better deal. In a report published on 17 May, the CMA addressed some of the less commonly seen practices of high street banks that often impact small business owners, including 1.2bn in unauthorised overdrafts, proposals for a cap on maximum fees and the introduction of prompts for overdrafts at the end of free banking periods. It is hoped that the CMA’s report will encourage small business owners to shop around more and switch between banking products. National chairman of the Federation of Small Businesses (FSB), Mike Cherry, said: Today’s banking market does not work well for small businesses. Current levels of switching between current accounts amongst small firms are far too low, with only four per cent of FSB members switching in the last year. ‘small business owners are still not confident that switching banking products or services will be a risk-free, seamless process, and as a result, many choose not to switch. A new awareness campaign and measures to make switching transparent are promising steps, added Cherry. The CMA also considered how innovation could help increase competition between banks. An open, accessible online banking standard could allow business customers to safely share transactional history with other banks, providing greater choice, for example.
ABOUT THE EXPERTFred Heritage
Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.