Customers will be able to manage their money and compare products from different banks in a single digital app under radical reforms designed to "shake- up" the industry.

The Competition and Markets Authority (CMA) has unveiled a package of measures which it says should help customers shop around to get a better deal and allow smaller and newer banks to grow.

Under the changes banks will have to publish trustworthy and objective information on quality of service on their websites and in branches, allowing customers to see how they stack up compared to the competition.

Alasdair Smith, chairman of the CMA's retail banking investigation, said: "We are breaking down the barriers which have made it too easy for established banks to hold on to their customers."

'Open Banking' App Part Of Industry Shake Up

In the future, people and small businesses will be able to manage accounts held with different providers in a single digital app.


The watchdog says this will help customers take more control of their funds, for example by making it easier to move money around and avoid overdraft charges.

The Cost Of Banking To The Banks

Banks will have to put this "open banking" measure into place by early 2018, the CMA said, adding: "Many people are paying more than they should and are not benefiting from new services."

They will also have to:

:: Send out suitable "prompts" such as on the closure of a local branch or an increase in charges, to remind customers to review whether they are getting the best value and switch banks if not.

:: Send alerts to customers going into an unarranged overdraft, and inform them of a grace period, to avoid charges. Banks will also have to set a monthly cap on unarranged charges, and tell customers.

:: Provide financial backing and technical support to independent charity Nesta to make it easier for small businesses to get a better deal. A range of measures targeted at small businesses will include a loan eligibility tool.

Which? Exposes Free Banking Myth

At the moment, only 3% of personal and 4% of business customers each year leave their old bank and switch.

The CMA said someone could save £92 a year on average by switching to a deal better suited to their needs. Small businesses could save around £80 a year.

People who are often overdrawn could also benefit from the changes. Someone who is overdrawn for one or two weeks every month could save £180 per year on average, the CMA said.

A Sky Data poll shows that 71% of people would feel very uncomfortable with their bank sharing their data with third parties, and 73% of those asked said they would prefer a fixed cap on overdraft charges for all banks*.

Alex Neill, director of policy and campaigns at Which?, said he was sceptical the reforms would make a big difference.

He said: "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."

:: Sky Data interviewed a nationally representative sample of 1,029 Sky customers by SMS on 9 August. Data are weighted to the profile of the population.