LONDON (Reuters) - Britain's biggest banks will have to cap unauthorized overdraft fees and join a price-comparison website to give customers better service, Britain's competition watchdog said on Tuesday, following a 19-month investigation to reform the banking sector.
The Competition and Markets Authority (CMA) said the majority of customers did not know if they were getting good value for money from their banks, with most staying with the same lender for over a decade.
The measures proposed should help customers identify better finance deals and save about 1 billion pounds ($1.45 billion)over five years, the CMA 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.
Regulators and lawmakers are keen to increase competition in a sector dominated by the country's biggest four lenders -- Lloyds Banking Group (L:LLOY), Royal Bank of Scotland (L:RBS), Barclays (L:BARC) and HSBC (L:HSBA) -- which control more than three-quarters of current accounts and provide nine out of 10 business loans.
The CMA has so far decided against more radical measures such as ordering a break-up of the largest players, because it said it would not address "fundamental competition problems".
Stakeholders have until June 22 to submit feedback on the measures before a final report is published in July or August.
A slew of new and niche banks are bidding to poach market share from the blue-chip lenders, including Secure Trust (L:STBS), Virgin Money (L:VM), Aldermore (L:ALD), Shawbrook (L:SHAW) and Metro Bank (L:MTRO).