As the Competition and Markets Authority (CMA) opens for business and the Financial Conduct Authority (FCA) takes control of regulating credit, this marks a turning point for regulation in banking. They must both now step up to the challenge, show they mean business and make it plain to the financial services industry that it must work harder for consumers.
Banks have started to show they are learning lessons from past mistakes, but still only a third of people trust the banking sector. There's not yet enough evidence of real change coming through.
While much has been done in the name of promoting competition, so far this has delivered little real benefit for consumers, and current account switching rates continue to be pitifully low.
We're delighted the Government has responded to our calls for people to be given better data about their personal current account running costs and this gives us a real glimmer of hope that in the future consumers will have the tools they need to drive a competitive market. But we need to make sure that real choice exists across the market.
That's why the role of the financial regulators is critical. We want them to take a two-pronged approach to protect consumers and inject competition into the market, to make sure the financial services industry doesn't fall into the red again.
Priorities for the CMA must be to investigate whether the barriers that prevent challenger banks entering the market are reducing, if levels of switching in financial services are increasing and whether there is greater transparency emerging across the board.
We have seen recent encouraging signs that the FCA is willing to crack down on providers and fix problems in the market. There is more the FCA can and should be doing to establish trust, starting by holding senior executives to account and clawing back their bonuses when it fines their banks. The possibility of individual sanctions for senior executives will provide a much stronger incentive for banks to treat their customers fairly.
Now that they are taking over the regulation of credit, we'd like them to show they mean business from day one by ensuring that lenders do more to help customers in difficulty, and by clamping down on excessive fees beyond payday lending. It's also ridiculous that shopping around for credit is potentially damaging for your credit record and could make the cost of credit higher.
However, the burden is not solely on regulators, and the industry must redouble its efforts to regain trust. There is no room for defensiveness. We want banks to be obsessive about customer service and to really compete on what they can offer their customers.
If the industry doesn't get things right they only need to look to other failing markets to see what might be in store. With the referral of the energy market to the competition commission last week, Which? wants wider recognition that radical action is needed when competition is failing and markets aren't working for consumers.