Finance Fred Heritage · 18 January 2017
Switching between banks to be made easier for small firms
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.
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.