Laura WilesThe Competition & Markets Authority (CMA) has launched a review of the SME Banking (Behavioural) Undertakings given in 2002 by nine clearing banks following a market investigation by the then Competition Commission into the supply of banking services to SMEs.
In 2014, the CMA reviewed the undertakings, and in 2016 decided to release all but four provisions. The retained undertakings prevent the relevant banks from requiring – as a condition of granting a business loan or approving the opening of a business deposit account – that the SME open or maintain a business current account with the bank. They can, however, still offer incentives to customers to do so. In 2016, the CMA decided it still needed to keep this limitation in place. Since then, it things there have been changes to the competitive landscape for SME banking (ie new market entrants), and new customer behaviours (such as more frequent switches in banker and multi-banking) and regulatory trends (the Consumer Duty applies to dealings with smaller SMEs) that may have weakened both the product linkages between business current accounts and SME lending and the relevant banks’ market power.
The CMA wants to assess, by reason of any change of circumstances, whether the undertakings are no longer appropriate and need to be varied, superseded or released. Its preliminary thought is that there is a realistic prospect of finding that there has been a relevant change.
The consultation closes on 7 May 2025.