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CMA banking investigation into competition of current and small business accounts delayed CMA banking investigation into competition of current and small business accounts delayed
(about 20 hours later)
An investigation into the competitiveness of current accounts and small business banking has delayed the publication of its findings until August. A long-awaited report into the retail banking industry has been delayed by the Competition and Markets Authority to give it more time to decide what measures it might take. 
The Competition and Markets Authority first proposed the probe in July 2014 over fears that customers were not getting the best deal. The three-month delay will push the investigation into its fourth year with a final deadline now set for August. Details of the watchdog’s planned remedies, which had been due last month, will not now be published until May. 
Difficulties switching current accounts, a lack of smaller competitors to the "big four" banks and lending to businesses were all areas for concern. The delay angered the consumer group Which?. “This inquiry is now looking like a lost opportunity to deliver better banking for consumers,” warned Which? executive director, Richard Lloyd.
But the CMA has now delayed the publication fo its findings until August in order to "properly consider" responses to suggested measures to soften the impact of overdraft charges. However, the regulator published a number of new possible recommendations. 
The CMA has said it wants banks to offer grace periods during which customers can take action to avoid unarranged overdraft charges. The CMA said banks should give customers a choice on whether they should have an unarranged overdraft facility or not and provide measures to limit maximum charges. In the current account market, it had been focusing particularly on unauthorised overdrafts. Yesterday it suggested banks could do more to warn people that they are about to go overdrawn, by sending them a text for example, either when they’re close to going into the red, already overdrawn or when they have had a payment turned down because there’s no money in their account.
When the investigation was launched, the CMA said that overdraft charges were too complex and made it hard for customers to choose the cheapest or most appropriate accounts for them, which in turn limited the banks' incentives to compete. But it suggested that its final report could recommend that the costs of going overdrawn could be capped and the time-period customers are given to top up their account before being charged for going overdrawn could be extended.
Alex Chisholm, CMA chief executive, said in 2014: In a supplemental notice published yesterday, the CMA said: “We are considering measures to increase the constraints on [personal current account] providers’ overdraft offerings. We are seeking to do this by enhancing our switching measures and by developing additional remedies that increase customers’ awareness of and engagement with their overdraft usage.
"Competitive personal and SME banking markets are essential to households and businesses throughout the country, and to the success of the UK economy. “We are also considering measures to limit the cumulative effect of unarranged overdraft charges.”
"However, our studies have found that despite some positive developments, significant competition concerns remain which mean that customers may not be getting consistently good service and value from their banks." The CMA has strengthened its proposals after publishing its initial thoughts last October that were met with derision from challenger banks which demanded changes that might make it easier for them to win business away from the older, established big five.
The CMA has said it welcomes responses to the overdraft inquiry by March 21. Commenting on the new proposals, Richard Neudegg, head of regulation at uSwitch, said: “We want to see solutions that force all banks to up their game on customer service and product innovation.”
  He welcomed the focus on achieving better outcomes for overdraft users, “as it is these customers who end up paying the most for current account services”. 
He added that the banking industry should be providing clearer information about the true cost of current accounts, as well as ensuring consumers can access better deals.
But Mr Lloyd was more scathing: “We are disappointed that the CMA appears unwilling to take action to control unfair, punitive charges faced by unauthorised overdraft users,” he said. “More information and prompts are simply not enough.”
He said that the regulator should use the further extension of its inquiry to bring forward stronger solutions to tackle unfair charges and ensure banks are held to account for how they treat their customers.
The CMA has asked for responses on its new overdraft proposals from all interested parties by Monday 21 March 2016.