By Gavin Lumsden of Citywire

Consumer groups have branded a 19-month inquiry into retail banking a disappointment after the Competition and Markets Authority (CMA) proposed a cap on unauthorised overdraft fees and a requirement for banks to join a price-comparison website.

Ignoring calls for a break-up of the big banks, the CMA said the problem with the banking market was the inability of consumers to get information on costs and charges.

It believes providing people with the right information will help them tell if their bank is offering value for money and could prompt more to switch provider.

Currently nearly 60% of banks’ personal customers have stayed with the same bank for over ten years and over 90% of small businesses get loans from the bank where they have their current account, proof of a lack of competition in the sector.

The CMA wants banks to set a monthly maximum on the amount they charge on unauthorised overdrafts and to alert customers when they are breaching their limits. In 2014 banks generated £1.2 billion of revenues unarranged overdraft charges.

It has also proposed new online comparison tools and improvements to the current account switching service.

It urged banks to speed up their adoption of new technology and introduce an open API (application programming interface) banking standard. This would enable customers to safely share their transaction histories and could enable the development of apps that could direct people to banks that offered them the best deal, the CMI said.

‘For too long banks have been able to sit back and not work hard enough for their personal and small business customers,’ Alasdair Smith, chair of the Retail Banking Investigation, said in the report.

However, his team has dismissed the idea of breaking up the existing high street banks.

‘Having more and smaller banks, which customers still couldn’t easily choose between because of lack of transparency on fees and charges, would not significantly improve the market or give customers a better deal,’ the CMA said.

The watchdog considered abolishing the traditional banking model of ‘free if in credit’ (FIIC) current accounts. Although it said such accounts were not really ‘free’ it said they worked well for many customers and banning them would reduce choice and could see the cost of current accounts rise, not fall.

Which?, the consumer rights campaign group, expressed disappointment at the findings.

‘This inquiry has achieved little more than to propose basic information measures the big banks should have introduced years ago,’ said Alex Neill, director of policy and campaigns.

‘Steps to stimulate switching are welcome but the chance to deliver better banking for all customers has been missed,’ he added.

He called for the City regulator, the Financial Conduct Authority, to step in and tackle unfair overdraft charges that in some cases are far higher than notorious payday loans.

In the City, bank shares rose as investors and analysts reckoned the Big Four banks had got off lightly.