article: The aim is to help people save money by encouraging them to change their banks, especially if they are likely to go overdrawn. The plans come from the Competition and Markets Authority, which has the power to enforce its proposals. They are the result of its two-year investigation. The big idea is that something must be done to break the inertia of the UK banking public. Just 3% of individuals and 4% of businesses switch their banks in any one year. The CMA has already come to the conclusion that there is not enough competition to pressurise the banks into offering significantly better or cheaper services than their rivals. In effect the big five banks - RBS, Barclays, HSBC, Lloyds and Santander - plus the Nationwide building society have their own huge, but largely captive, markets. So the aim is to make it easier for people to switch banks and accounts, and to encourage them to save money by finding a better deal. "The older and larger banks, which still account for the large majority of the retail banking market, do not have to work hard enough to win and retain customers and it is difficult for new and smaller providers to attract customers," the CMA says. The other big issue is one that has dogged the industry and its customers for many years - the ability of banks to charge more or less what they like if you go overdrawn without permission. In 2009, the Office of Fair Trading (now part of the CMA) failed completely in a legal challenge which would have overthrown the right of banks to set their own charges as they saw fit. Now the CMA is ordering the banks to set their own monthly cash limits - a monthly maximum charge - on just how much they can charge if you go into an unauthorised overdraft - going into the red without asking your bank in advance. Of course that doesn't go as far as a regulator being allowed to set a monthly limit on overdraft fees and charges. But the fact there will be some sort of stated cash limit will make things clearer. "Many personal customers, in particular overdraft users, could make significant savings by switching to a different current account," says the CMA. That particular change should happen by September next year. To encourage customers to switch or shop around, the CMA is ordering the banking industry to embrace the idea of Open Banking. That means the financial technology industry is being invited to develop a computer application which will let bank customers run all their bank accounts, including moving money between them, even if they have several accounts spread around different banks. At the moment the increasingly popular bank apps, which are issued by banks to their own customers for use on mobile phones, operate that bank's accounts only. This new, all-purpose, banking app should be able, the CMA says, to let customers upload all their banking details so that "authorised intermediaries", such as price comparison services, will be able to tell
summary: Some very big changes are now in the pipeline for the way people use their bank accounts and the way banks charge their customers.