The UK’s Competition and Markets Authority (CMA) has unveiled numerous measures, including a cap on fees for unarranged overdrafts, in a bid to protect customers and boost competition in the banking industry.
The competition watchdog proposed banks to set a monthly maximum charge for unarranged overdrafts on personal current accounts, and alert customers before they have crossed the limit.
The regulator also proposed banks to adopt an Open API (application programming interface) banking standard, which will allow customers to share their transaction history with other banks and trusted third parties.
"This will enable bank customers to click on an app, for instance, and get comparisons tailored to their individual circumstances, directing them to the bank account which offers them the best deal," CMA said.
At the same time, banks need to prompt their customers on a routine basis to ensure that they are receiving good value, CMA stated.
However, the regulator ruled out the possibility of breaking up the biggest banks as it felt that merely having more and smaller banks with less transparency on fees would not solve the fundamental competition issue.
Chair of the Retail Banking Investigation Alasdair Smith said: "New entrants into a market are an important source of competition and innovation, and we are well aware of the current barriers to challenger banks in UK retail banking.
"What’s really holding them back is their ability to highlight to customers how new offerings compare with their current deal. Our package of banking reforms will help new competitors get a stronger foothold in a market which is of vital importance to the whole economy."