The CMA will be publishing its remedies to improve competition in the banking sector on 17th May but challenger banks are worried after the authority announced there was ‘strong evidence’ to suggest corporation tax would impact smaller lenders in March.
Rishi Kholsa, CEO and Co-founder of OakNorth Bank said the remedies published by the CMA in October were disappointing and was hoping for stronger measures this time around.
“The remedies it proposed were primarily focused on personal and business current accounts, and price, rather than encouraging diversity in the market place and the development of new, innovative and tailored products - we are interested to see whether these issues have been addressed.
“It is vital to the UK economy that SMEs are able to fund investment and growth. SMEs therefore need to be made aware of their options and encouraged to shop around, but the creation of a price comparison website is not the answer.”
Rishi felt that a price comparison website suggested by the CMA attempted to bring down price in a market where the actual problem was a lack of supply.
“If you push down prices in a supply-constrained market, you will have even less supply which will only make the situation worse.
“Lending needs to be tailored to the individual characteristics of the business at hand, so creating a price comparison website will only encourage market participants to compete on price, ultimately leading to more of a computer-says-no approach and further commoditised products.”
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