THE COMPETITION and Markets Authority (CMA) will focus on difficulties customers face when trying to switch personal and business current accounts in its banking market investigation.
The government body yesterday provided an update on its inquiry so far, and said it was focusing on three specific areas, the first being a look at the problems customers have in trying to effectively shop around, choose and switch products or suppliers.
According to the watchdog, if customers encounter obstacles when they try to find out about or compare alternative offers, assess which is best for them and then act on that knowledge by switching, competition will weaken.
A lack of customer engagement, or inertia, may also be a part of the problem, the organisation said.
The CMA is also looking at how concentration in the market could be harmful for customers.
The group said concentration could give rise to market power, which could “lead to worse outcomes for customers through, for example, firms having unilateral market power or as a result of firms coordinating their behaviour”.
Finally, the competition body will look at how barriers to entry and expansion are detrimental to customers. It said the high costs of customer acquisition “may impede entry and expansion on a scale sufficient to stimulate competition and constrain the incumbent banks”.
The CMA announced that it would investigate the banking market in November last year, and is due to publish its provisional findings in September. So far the investigation group has spoken to 11 banking providers from across the UK.