New regulations are set to come into force that will enable customers to choose the cheapest lender, after a review by the Competition and Markets Authority said consumers are paying more than they should be for banking.

From 2018, banks will have to share customers’ data with third parties who can then show how much could be saved by using other lenders. Several online ‘challenger banks’ have sprung up recently, offering prices far cheaper than those of the main “big four” lenders – Lloyds, RBS, HSBC and Barclays – but figures suggest that only 3 percent of consumers take advantage of these lower prices by changing bank.

As part of the new regulations, banks will also have to have a cap on monthly fees for unarranged overdrafts. However, reactions to the news have been less than positive; Alex Neill, director of policy and campaigns at consumer group Which? said, “it is questionable whether these measures will be enough.”

“It is disappointing that the monthly charge cap is not actually a cap and banks will be allowed to continue to charge exorbitant fees for so-called unauthorised overdrafts, rather than protect those customers that have been identified as among the most vulnerable.”

The CMA is hoping it will give a boost to the Fintech sector, powering growth in the area as investment falters post-Brexit. Jamie Campbell, Head of Customer Experience at Bud, a start-up allowing millennials to manage all their banking from one place, says Fintech is the “people’s champion” of finance. He agrees that Fintech companies are increasingly becoming the better way of banking, continuing, “all of this will lead to better products and services for individuals”.

09/08/2016