Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, whether he has plans to tackle the loyalty penalty faced by consumers who do not switch bank providers.

The Government believes that it is important to improve competition in the banking sector and ensure consumers have the information they need to make sensible decisions about their money. The Government has established competition and conduct-focussed regulators which have broad and robust powers to enforce breaches of their rules.

On current accounts, the Government has worked with industry to deliver the Current Account Switch Service (CASS) so customers can switch where they see a better deal. Customers have switched over 4.2 million times since CASS was launched in 2013. The Government is currently supporting industry to put in place additional measures to build on and improve CASS, as part of the package of remedies proposed by the Competition and Markets Authority to improve competition in the banking sector.

On cash savings accounts, following a 2015 study of the market, which concluded that competition in the sector was not working as effectively as it could be, the Financial Conduct Authority (FCA) developed a series of measures to improve the information firms make available to consumers and to make it easier for them to switch accounts. For example, the FCA trialled a ‘sunlight’ remedy to bring to light firms’ strategies towards their longstanding customers by publishing the lowest interest rates offered on easy access cash savings accounts and easy access cash ISAs on the FCA’s website. The FCA is currently evaluating the effectiveness of the ‘sunlight’ remedy trial and considering whether any other actions may be needed to achieve more effective competition.