OFT Report on Personal Current Accounts shows NI Banks need to do more – Consumer Council
Today’s OFT report on Personal Current Accounts (PCAs) shows the need for NI Banks to do more for consumers according to the Consumer Council. The report highlights that despite key recommendations made in an OFT market study report into personal current accounts undertaken in 2008, banks continue to drag their heels on implementing more transparency and removing barriers to switching banks, causing ongoing detriment to consumers and ‘major impediment’ to effective competition..
Speaking about the OFT report Consumer Council CEO, Antoinette McKeown said,
“This OFT report indicates that less than 4% of consumers across the UK switch bank accounts.”
“The OFT report shows that, five years after the OFT made key recommendations to banks, there remains a distinct lack of transparency in the cost of PCAs which contributes to a lack of consumers confidence in switching banks. A lack of competition, diversity of choice, good value and service also adds to consumer apathy.”
“There is some good news for consumers however. Due to pressure from OFT, FSA and consumer bodies, there has been a significant decrease in unauthorised overdraft charges. However, very few PCA providers offer consumers the ability to opt out of unarranged lending with non-fee carrying personal current accounts.”
“Over the past number of years the Consumer Council has carried out extensive research into how consumers view financial products and services in Northern Ireland, how they shop around for products and understand products. The Consumer Council wants to help ensure that consumers are confident that they are getting value for money from their bank and that they are willing to switch if not.”
“The Consumer Council has responded to consumer need by developing a Personal Current Account Manifesto which was informed by consumers who told us that some of the most important things in daily banking are good customer service, clear and transparent charges, easy to understand communications and reliable help when switching from another bank.”
“We are working with the banks across NI encouraging them to adopt and implement this Manifesto in the interest of consumers.”
“The Consumer Council also believes that there are a number of things that the regulator and the banks could do to help consumers become better equipped when choosing financial products. Common terminology should be used by all banks to make products easier to compare against competitors; banks should make the terms and conditions easy to read, legible font size and more attractive, to encourage more consumers to check them carefully before signing up to products; and overdraft fees should be transparent, relevant and proportionate to the amount overdrawn.”
“This OFT report is clear that more needs to be done to give consumers a fairer deal and that banks should be working harder to rebuild confidence in the banking system.”
“Some progress has been made already, for example reduction of charges, how information is displayed and the provision of an annual summary which shows how much you have paid in fees and charges over the year. It is now up to the banks to do the hard work. More needs to be done to give consumers a fairer deal, to make improvements for customers in the form of offering better value for money and service.”
Notes to editor
- In May 2007 the Competition Commission confirmed the Consumer Council’s concerns that bank customers in Northern Ireland are not being offered fair and competitive personal current accounts (PCAs). This announcement brought to conclusion a two and a half year investigation which started in November 2004 when the Consumer Council and Which? made a super-complaint against the big four banks – Bank of Ireland, First Trust Bank, Northern Bank and Ulster Bank. The Competition Commission has set out a list of legally binding remedies that the banks must implement. This is known as the NI Banking Order 2008.
- The remedies in the Order were designed to develop competition in the Northern Ireland PCA banking services market by helping customers make informed choices about PCAs. They included a requirement for providing better and clearer information to customers to help them understand Banks’ PCA services, charges and interest rates. Other remedies required giving customers at least 14 days’ notice before deducting overdraft charges and interest from their account; and introduced improvements to the switching process to ensure that customers who switch banks do not incur costs in doing so.