New competition measures for banks in North
Personal banking customers in the North will benefit from new measures to increase competition.
This follows today’s final report from the Competition Commission (CC) on the market for personal current account (PCA) services in the North. The CC found that competition was limited by banks’ unduly complex charging structures and practices, their failure adequately to explain them and customers’ reluctance to switch to another bank.
Banks in the North must now make major improvements to their PCAs. These include providing better and clearer information to customers to help them understand banks’ PCA services, charges and interest rates; giving customers at least 14 days’ notice before deducting charges and interest from their accounts; and introducing improvements to the switching process to ensure customers who switch banks do not incur costs in doing so.
The new measures will come into force in the North next year to coincide with likely changes throughout the UK from the current review of the Banking Code by the Banking Code Standards Board (BCSB) and from implementation of the Consumer Credit Act 2006.
In reaching its decisions, the CC has consulted extensively with the banks, the British Bankers’ Association, the Financial Services Authority, HM Treasury, consumer groups and the BCSB, as well as the Office of Fair Trading (OFT), which recently announced a UK-wide market study into personal bank current account pricing.
Christopher Clarke, Chairman of the Inquiry Group and a CC Deputy Chairman said: "Our measures will ensure a better deal for personal current account customers in Northern Ireland. By enabling them to understand the costs of operating their PCAs, they will be much better placed to take decisions on the use of their existing account."
Customers will also be in a much better position to choose which PCA and which bank best suits their own personal circumstances. An increase in switching bank accounts, or an increase in the possibility of doing so, will incentivize banks to provide better terms and clearer conditions. Such an increase in competition can only benefit customers."
