IoD welcomes CMA’s suggestions to promote competition in the banking industry
The Institute of Directors has welcomed the Competition and Market Authority’s provisional findings of its investigation into the retail banking sector, highlighting that heavy-handed regulation is not the best way to fix a market which could be working better for both current account holders and small businesses.
Jimmy McLoughlin, Head of New Economy Policy at the Institute of Directors said:
“Few would disagree that competition in the banking sector could be improved. For small businesses, the battle to secure a loan or overdraft can feel like an uphill struggle. For current account holders, switching bank accounts is seen as a time-consuming, bureaucratic and pointless exercise. Although these are big challenges, the CMA has rightly concluded that further regulation, a ban on free accounts, or a break-up of high-street banks is not the answer.
“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. Tools such as the Current Account Switch Service and Midata show the banks are alive to these issues and keen to find market-led solutions.
“It’s also good news that alternative sources of finance, like equity crowdfunding, peer-to-peer lending and challenger banks are on the march. This is an exciting time for the banking industry and disruption will play a central role in boosting consumer choice and driving the shift to an equity economy. There is a real concern, however, that recent Treasury and regulatory impositions could bring this progress to a halt. To ensure start-ups, entrepreneurs and established firms make the most from new and innovative services, it’s crucial that regulators, government policies and industry initiatives all work to promote, not stifle, competition."