Banking shake-up: How it affects you and your bank
A major shake-up is on the cards at your high street bank as the findings of a two-year inquiry are revealed.
Today, the Competition and Markets Authority (CMA) unveiled changes to make it easier for people to switch current accounts and measures for banks to keep customers better informed.
But what will the changes mean for you?
What is Open Banking?
The phrase 'Open Banking' is popping up all over the place today. But what is it?
Open Banking – expected to come in from early 2018 - allows customers to manage multiple accounts from different providers through a single banking 'app'.
By securely sharing data with other banks and third parties, you can more easily compare products and find the most suitable current account.
This would all be done without the need for sharing personal information on comparison websites.
Open Banking would use an Application Programming Interface (API) to share information securely. This is the same technology used to tell an Uber driver who you are and where to pick you up.
Avoid overdraft charges
If you're in danger of going into an unarranged overdraft, banks will be required to send you an alert and offer a grace period.
This will give you time to transfer money and avoid charges.
Banks will also have to set a monthly cap on charges.
Swapping current accounts
Just 3% of customers switch to a different bank in any year, but Brits could make annual savings of £92 by switching. If you regularly go into your overdraft, savings could be as high as £180 a year.
The new measures means banks have to publish clear and objective information so you can quickly and easily see how your bank measures up and get recommendations of more suitable accounts.
The CMA also wants you to be better informed of changes at your bank.
If a local branch is closing, or if there are increases to charges, customers would receive a 'prompt' to let them know.
This would allow you to check if you are still getting the best deal and potentially switch accounts.
This article is provided by the Money Advice Service.