Multiple industry groups have hit out at the Competition and Markets Authority (CMA)’s provisional recommendations for the retail banking sector, saying “more needs to be done”.
British Chambers of Commerce (BCC) director general John Longworth said businesses will be “disappointed” with the CMA’s proposals, accusing the competition watchdog of “effectively endorsing a status quo that many businesses find unacceptable”.
“The CMA could have suggested further remedies to boost competition, or signalled alternatives to government, such as a beefed-up British Business Bank,” he said.
EEF senior economist George Nikolaidis criticised the CMA’s focus on price comparison and switching accounts, saying: “Given the low impact these remedies have had in other failing markets, such as energy, we shouldn't be putting all our eggs in this particular basket.”
“These remedies are unlikely to be the magic bullet that will solve the underlying competition issues in the financial sector,” Nikolaidis added.
The Confederation of British Industry (CBI) was more positive, with CBI interim chief policy director Matthew Fell saying: “Business and consumers want competition and choice in the retail banking market, and will welcome the CMA’s initial ideas to improve the Midata service and proposals for a new price comparison website for business.”
Fell added, however, that the CBI wanted the watchdog to “focus on measures that help challenger banks scale-up, by levelling the playing field on the cost of capital whilst helping to publicise the switching service”.
The Institute of Directors (IoD), meanwhile, backed the CMA’s decision to reject major changes such as a ban on free bank accounts or a break-up of Britain’s biggest banks. IoD head of new economic policy Jimmy McLoughlin said: “The job of regulators is to facilitate the easiest possible solutions, like proposals to encourage price comparison websites, give customers control over their data and allow challenger firms the space to scale-up and compete.”