Insights from The Competition Lawyers: The Competition and Markets Authority (CMA) has recently issued a provisional decision that could reshape how small and medium-sized enterprises (SMEs) interact with major banks in the UK. This update centres on the ongoing review of the SME Banking Undertakings, originally established in 2002 to promote fair competition in business banking.
As competition law specialists at The Competition Lawyers, we break down the essentials of this development, its historical context, and what lies ahead for businesses navigating these changes.
The SME Banking Undertakings emerged over two decades ago as a regulatory safeguard to address anti-competitive practices in the SME lending market. These undertakings bound eight major banks—Barclays, HSBC, Lloyds Banking Group, NatWest Group, Santander UK, Danske Bank, AIB Group (UK), and Bank of Ireland (UK)—to specific behavioural commitments (source – CMA). A key surviving element, the Limitation on Bundling Provisions, is understood to have prohibited these institutions from requiring SMEs to open or maintain a business current account as a prerequisite for securing loans or deposit products.
In 2016, following an earlier CMA review, most of these undertakings were released, leaving only the bundling restrictions intact. This preserved measure was aimed to ensure SMEs could access credit without being locked into uncompetitive account packages. However, as market dynamics have evolved—with things like digital banking, fintech disruptions, and post-pandemic economic shifts—the CMA launched a fresh review on 2 April 2025 to assess whether these SME Banking Undertakings remain fit for purpose.
On 13 August 2025, the CMA published its provisional decision, concluding that the remaining Limitation on Bundling Provisions are no longer appropriate and should be fully released. This assessment stems from identified changes in circumstances, including enhanced competition from challenger banks and improved transparency in SME banking products. The decision highlights that the original concerns prompting the undertakings—such as reduced switching barriers and coerced bundling—have diminished significantly.
Notably, the review found no evidence of ongoing compliance issues that would justify retention, emphasising instead the potential for innovation and efficiency gains by allowing banks greater flexibility. This provisional stance has been under public consultation, reportedly closed on 3 September 2025, inviting input from stakeholders on whether variations, supersession, or outright release is warranted. At The Competition Lawyers, we view this as a pragmatic acknowledgment of market maturation, though it underscores the need for vigilant monitoring to prevent any rollback in SME protections.
Releasing the SME Banking Undertakings could usher in a more integrated banking landscape, where bundled products become commonplace, potentially simplifying access to tailored finance solutions for SMEs. However, this shift could raise risks: businesses might face renewed pressure to consolidate services with one provider, potentially eroding choice and inflating costs if competition doesn’t keep pace. For SMEs already grappling with economic headwinds, this could mean reevaluating banking relationships to safeguard against less favourable terms.
The CMA will be sorting its final decision, after weighing consultation responses. In the interim, affected banks must continue adhering to the provisions, but proactive steps—like auditing current agreements or exploring alternative providers—could position SMEs advantageously.
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