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LONDON (Alliance News) - A full competition investigation into the personal current account and small- and medium-sized enterprise retail banking sectors was Thursday launched by the Competition and Markets Authority, the UK's main competition and consumer authority.
The move to launch an inquiry follows a consulting period on the CMA's provisional decision in July that there should be a market investigation into the markets for personal current accounts and SME banking.
The CMA said it continues to have concerns about the effectiveness of competition in the sectors, highlighting low levels of customers shopping around and switching, limited transparency, barriers to entry and expansion in the sector, and very little movement over time in the market shares of the four largest banks.
The four largest lenders in the UK are Barclays PLC, HSBC Holdings PLC, Lloyds Banking Group PLC, and Royal Bank of Scotland Group PLC.
'Effective competition in retail banking is critically important for individual bank customers, small and medium-sized businesses, and the wider economy," CMA Chief Executive Alex Chisholm said in a statement.
"After carefully considering the consultation responses, most of which supported a market investigation, we remain of the view that there should be a full market investigation into the sector, conducted by a market reference group drawn from the CMA's expert panel of independent CMA members. The market reference group will investigate in detail and decide what action, if any, may be needed to improve competition for the benefit of personal and small business customers," Chisholm added.
The chief executive of the British Bankers' Association, the UK's banking sector association, said banks will cooperate fully with any investigation.
"There are already substantial changes currently underway across the banking industry to strengthen competition, which improves choice and service for customers," Anthony Browne said in a statement.
John Longworth, the director general of the British Chambers of Commerce, welcomed the review.
"This is undoubtedly the right decision as businesses want more competition and greater choice in the banking sector. For many years Britain's dysfunctional banking sector has struggled to meet the needs of SMEs, impeding the growth prospects of some of our most promising young companies," Longworth said in a statement.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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