Consumers Need To Look Outside The Big Four BanksBack to Media
22 October 2015
Comment on the recommendations from the competition and markets authority
With the news today that the CMA (Competition and Markets Authority) has put forward a series of ideas to make switching banks easier, Alex Letts, co-founder of the new online current account provider, Ffrees, says that this isn’t enough as consumers need to look at alternatives to big four banks.
Ffrees is an online current account provider and debit card that positions itself as the ‘UnBank’. There are no overdraft fees, because there are no overdrafts. Instead Ffrees philosophy is to help people save. Fees are presented clearly and upfront with customers given the option to raise or lower their monthly fee based on how they want to use their account. Commenting on the report from the CMA, Alex Letts, co-founder and Chief Unbanking Officer says: “Making it easier for customers to switch their current account isn’t good enough, as many consumers still feel that the big four and traditional banking are their only options. They’re not. Banking customers need to be made aware, not just of better deals, but also better ways of managing their finances.
This is why we’re disappointed that the CMA has decided to not end so called ‘free banking’. There has never been such a thing as ‘free banking’. A 2013 report from the Office of Fair Trading found British banks make up to £9billion a year from current accounts. That’s around £139 on average for each account. This is despite them being marketed as “free”. While the recommendations from the CMA are welcome news, stopping short of forcing banks to charge for accounts, or preventing them from marketing them as “free”, still means consumers will be lured to ‘free accounts’ before being hit with overdraft fees and more.
“What this report highlights is that for too long the big four banks, which hold a massive 70% market share, have been fooling their customers. We believe that customers should be able to trust their current account provider and this report has shown that the vast majority of British banks have done little to earn this trust. Current accounts should be about managing money and saving, not overdraft and debt.
“At the moment Ffrees has 58,000 account holders, but revolutions have been started by many groups with far fewer people. We believe that the report and recommendations from the CMA are good for banking customers, but much more needs to be done to ensure they’re getting an honest product from a bank they can trust. There’s still a need for a banking revolution.”
Ffrees customers can access their money from ATMs and pay for goods using their Ffrees Visa debit card. Online management tools allow them to keep on top of their finances and move money into ‘virtual jam jars’ to help them save. Ffrees works with household retail partners to offer cashback on purchases in stores and online, with cashback earned being saved in its own ‘jam jar’.