Panel says don't pin hopes on consumers to drive competition

Panel says don’t pin hopes on consumers to drive competition


Commenting on the Competition and Markets Authority's (CMA) Retail banking market investigation: Provisional decision on remedies, Sue Lewis, Chair of the Financial Services Consumer Panel, said:


The CMA’s analysis shows that the quality of products and services has almost no bearing on market share. In other words, producing better value products and services has no competitive advantage. This deep-seated problem is unlikely to be solved by relying on consumers to drive change. Many consumers don’t want to switch providers; they just want to be treated fairly by their existing bank. Yet they are in a weak negotiating position, and it is not clear the proposed remedies will help them get better treatment. Those consumers who do want to switch will continue to be hampered by the obscure costs and charges inherent in ‘free if in credit’. Comparison websites are not a panacea, and indeed are more likely to lead to ‘information overload’ and inertia.


Simpler charges and information for overdrafts are welcome.  But prices will only be competed down in a well-functioning market, so the remedy is unlikely to protect customers from excessive charges. To the extent overdraft charges do reduce, it is likely that banks will just increase prices elsewhere, to make up for any lost income. Consumer outcomes will not be better, just different.


The Panel supports the proposal that the FCA should lead on service quality measures. We hope this results in meaningful metrics, shaped by consumers rather than firms, that highlight good and poor practices.


The acid test for the CMA’s proposed remedies will be whether they result in a stronger relationship between quality, value for money and market share. Poor and overpriced products should be competed out of existence. If they are not, the CMA should be prepared to go back to the drawing board.”





Maria Joao Paixao (Consumer Panel):                                 020 7066 7716




1     The Consumer Panel is a statutory body under the Financial Services Act 2012.  It was initially established by the Financial Services Authority in December 1998. The Panel advises the FCA on the interests and concerns of consumers. 

2     The Panel’s membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues. 

3     The emphasis of the Panel's work is on activities that are regulated by the FCA, although it may also look at the impact on consumers of activities outside but related to the FCA's remit. More information about the Panel's work is available on its website: or via its LinkedIn and Twitter accounts.


Sue Lewis (Chair)

Dominic Lindley

Caroline Barr

Jonathan May

Teresa Fritz

Pamela Meadows

Liz Barclay

Faith Reynolds

Mark Chidley

Jeff Salway

Sharon Collard

Doug Taylor

Jennifer Genevieve

Kitty Ussher