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Tesco Bank and Which? warn over UK bank account review Which? calls for 'complete overhaul' of bank accounts
(about 9 hours later)
Consumer group Which? and Tesco Bank have issued recommendations ahead of a review into UK retail banking. The consumer group Which? has said the competition regulator should "name and shame" banks that provide the worst current accounts.
Which? is calling for a complete overhaul of current accounts to protect against customers being overcharged. It is calling for a complete overhaul of current accounts to protect customers from high charges.
Meanwhile, Tesco Bank is proposing a "traffic light" system of red, orange and green labels to warn people how much their accounts are costing them. Meanwhile, Tesco Bank is proposing a "traffic light" system of red, orange and green labels to warn people how much their accounts are costing.
The advice comes ahead of a Competition and Markets (CMA) banking inquiry into the sector. The advice comes before a review of banking by the industry's regulator.
Next month the Competition and Markets Authority (CMA) is due to publish the provisional findings from its investigation into current accounts and banking services to smaller businesses.
Both Which? and Tesco Bank are calling for greater transparency in bank charges for services such as overdrafts.Both Which? and Tesco Bank are calling for greater transparency in bank charges for services such as overdrafts.
'Name and shame' 'Lost the trust'
Which? showed people different accounts and only a small minority were able to identify the cheapest overdraft.
The consumer group wants the CMA to look at how people use their accounts and the quality of customer service.
It is calling for the banks to ensure:
Which? executive director Richard Lloyd said, "With few consumers moving their finances to different providers, and the existing big banks continuing to hold substantial market power, the inquiry must look beyond ideas to improve information and switching.
"When it reports next month the CMA should propose changes that will incentivise banks to better respond to the needs of their customers."
Tesco Bank is suggesting a system similar to traffic light labelling on food.
The idea is for banks to show red warning lights on accounts that have very high charges.
"Banks have lost the trust of their customers and it is about time that the industry took concrete steps to restore faith in the sector," wrote the chief executive of Tesco Bank, Benny Higgins."Banks have lost the trust of their customers and it is about time that the industry took concrete steps to restore faith in the sector," wrote the chief executive of Tesco Bank, Benny Higgins.
"An opportunity exists for the industry to come together to deliver a straightforward, accessible solution that will help customers get a better deal from their bank," he added."An opportunity exists for the industry to come together to deliver a straightforward, accessible solution that will help customers get a better deal from their bank," he added.
Tesco Bank suggested a "traffic light" labelling system - similar to those used on food packaging - to "see at-a-glance the value of the account they currently have, as well as the other accounts available in the market".
Meanwhile, Which? said the CMA should force banks to "name and shame" the worst providers.
In addition, Which? said that the CMA should notify customers about reaching their current account limits, before dipping into their overdrafts.
Only 12% of people are able to identify the best account for an unauthorised overdraft user, according to Which?, with 39% able to spot which is best for staying in credit. Which? said this inhibits customers from switching to a better deal.
Which? executive director Richard Lloyd said: "With few consumers moving their finances to different providers, and the existing big banks continuing to hold substantial market power, the inquiry must look beyond ideas to improve information and switching.
"When it reports next month the CMA should propose changes that will incentivise banks to better respond to the needs of their customers."