Rishi Khosla, co-founder and CEO of OakNorth Bank, said the CMA’s report has fallen short, in particular on the issue of Small to Medium Enterprises (SMEs) looking for larger loans.
Khosla said: “The CMA has explicitly stated in its report that a combination of factors make it difficult for new entrants and smaller banks such as OakNorth to effectively compete. Yet despite this, the solutions it’s provided for SME lending are limited to unsecured loans of up to £25,000, so won’t address the issues facing SMEs that need secured or larger loans.”
He added there were millions of SMEs that were struggling to secure growth capital who may now need to wait up to four years for the situation to improve.
Kevin Mountford, banking expert at MoneySuperMarket, said: “Those looking for wholesale reform of the banking market are likely to be holding their heads in their hands. The CMA’s final remedies are more ‘gently does it’, as opposed to the seminal, watershed moment for British banking that many had been looking for.”
The report out yesterday, titled ‘Making Banks work harder for you’ which the CMA suggested will ‘pave the way for an open banking revolution’ includes a raft of measures targeted to get a better deal for customers.
After a two-year year investigation into the retail banking industry, yesterday the CMA outlined a package of measures to ensure “banks work harder for customers” and the “benefits of new technology are fully exploited”.
The authority is determined all banks create apps, which should be available from early 2018, to weigh up each bank’s services and prices and authorise the movement of funds between current and deposit accounts to help avoid overdraft charges or to benefit from higher interest payments.
This will be done using technology called APIs, used by the likes of Facebook and Uber, to make it simpler for people to share information.
The competition watchdog will also require banks to send out ‘prompts’ to remind their customers to review bank accounts and make banks publish objective reviews of their own services on their websites and in branches.
The CMA has also introduced specific measures to benefit unarranged overdraft users. Banks will be required to send alerts to customers going into unarranged overdraft, and inform them of a grace period, to avoid charges and offer a monthly debt interest fee cap.