CMA comments on current account switching plans & VocaLink’s takeover by Mastercard
The Competition and Markets Authority (CMA) in the UK has accepted undertakings from the Bacs payment scheme that commit it to delivering the improvements required by the CMA retail banking market investigation within a year.
“An important change will be the extension of the redirection service operated by the Current Account Switch Service (CASS),” CMA explains.
“This is designed to give further assurance to customers that all their payments will be switched from their old account to their new one, and so overcome a key concern about moving banks.”
At the moment only 3% of personal and 4% of business customers switch to a different bank in any year, even though UK consumers could save around £90 and SMEs £80 per year by switching, CMA says.
The authority has also mandated Bacs to work with banks and increase both awareness of and confidence in CASS.
“Our banking investigation demanded that banks worked harder for their customers. Taken together, its 17 recommendations will save customers between £700 million and £1 billion over five years,” comments Alasdair Smith, chair of the CMA retail banking market investigation.
CMA has also given a provisional nod to Mastercard’s purchase of VocaLink – as Mastercard has agreed to reduce the costs to the Link ATM network for switching infrastructure providers, open up connectivity to the network for alternative providers, and transfer/license the intellectual property rights relating to the Link Liss messaging standard.
CMA has recently voiced competition concerns regarding the takeover, and asked the two companies to address these or face an in-depth investigation.
It now says “there are reasonable grounds for believing that these proposals, or a modified version of them, might be acceptable to remedy the competition concerns it has identified”.
The proposals will now go to public consultation, and CMA has until 15 March 2017 to make the decision (although the deadline might be extended by two months, it is understood).
Mastercard says it hopes “to finalise this process as early as possible”.