EEF response to Competition and Markets Authority’s comments on SME business current account market
Following the publication of the Competition and Markets Authority’s interim conclusions on the state of competition in the SME business current account market, EEF chief economist, Ms Lee Hopley said: “The findings from the CMA confirm the experience of many small businesses accessing banking services in recent years – insufficient choice, a lack of transparency on services and difficulties switching – issues that have been exacerbated by the financial crisis. While it has been encouraging to see new types of finance provider trickle into the market, the decision by the CMA to look further into the structure of the BCA market this year is the right one.
“The next stage of this process must deliver clear and actionable recommendations that will not only deliver a less concentrated banking market for businesses, but be focused on the outcomes on improved flows of more competitively-priced finance and higher levels of churn in the current account market.”
EEF has previously called for government to:
– Considering providing SMEs with an explicit, capped, and time-limited incentive that matches any savings firms can secure from switching banks;
– Pushing the banks to move further than the redirection service and move as soon as possible to full account number portability;
– Considering how new banks could make use of existing bank and government infrastructure to lower the set-up costs of establishing a branch network;
– Considering in the light of all current and planned actions whether SME banking will nonetheless remain uncompetitive and should be referred to competition authorities.