SME owners don't switch accounts due to lack of competition, says CMA
Banking services for SMEs lack competition and need an overhaul, according to the Competition and Markets Authority (CMA).
The creation of a price comparison site would be one factor that could improve the way banks work to compete for customers, the consumer watchdog says.
Lack of movement
SME owners are sticking to their original current account supplier when they look to source business loans, highlighting the lack of movement within the sector.
The CMA published the results of its lengthy investigation into 12 banks and building societies that offer business current accounts for SMEs and personal current accounts (PCA).
According to the report, almost 60% of consumers have held their PCA at the same bank for more than a decade, and 37% have been with the same provider for over 20 years.
SME owners seem to be even less likely to move, with 90% sticking with their providers when initial 'free banking' periods come to an end.
Chairman of the retail banking investigation Alasdair Smith said: "We are considering a series of measures that will have a far-reaching impact on how banks operate and will empower accountholders to search for and switch to the account that suits them."
Smith added that financial institutions seem "to sit back and take their existing customers for granted."
The CMA has made several recommendations on how to improve banking services for SMEs, including allowing banks to prompt business owners to review their account services at certain ‘trigger points' such as a loss of service, closure of a branch, or changes in the terms and conditions of an account.