“The public have concluded that they have been ripped off by banks for years, and there is a good deal of evidence that many of them may be right," Andrew Tyrie, a Conservative who chairs the Treasury Select Committee, said today.
“The CMA have downplayed the problems created by free-in-credit banking. Free-in-credit banking is highly misleading, and probably plays a crucial part in inhibiting effective competition," he added.
The Competition and Markets Authority (CMA) published the preliminary results of its 18-month investigation into the retail banking sector last month.
At the time, it rejected calls to end so-called free banking, a policy that is initially popular with consumers but some experts say leads to lower customer satisfaction in the long run.
The CMA said in its preliminary recommendations that it saw "no convincing evidence that the prevalence of the [free] model distorted competition", although it "noted that some banks have already devised accounts which compete with free-if-in-credit (FIIC) through the rewards they offer, and also noted that FIIC accounts give a reasonable deal to many customers".
The Treasury Select Committee took evidence from the chair of the retail banking market investigation, as well as senior members of the CMA, this afternoon.
After the evidence session, Tyrie, who previously said that the CMA's conclusions were “going to take a lot of justifying”, remained unconvinced.
"Customers should be told how much they are really being charged. People deserve at least this much from their banks," Tyrie said, adding, "The CMA has fallen short of suggesting ways of doing this – something which people take for granted with the purchase of almost any other product or service. Until customers have the information they need to vote with their feet, competition in retail banking will remain elusive."
The CMA is set to issue a final report on current accounts and business banking in May 2016.