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LONDON (Alliance News) - The Competition and Markets Authority Friday recommended an in-depth market investigation into the retail banking sector after finding that essential parts of it do not meet the needs of its customers.
The watchdog is now consulting on its provisional decision that there should be an investigation into the markets for personal current accounts and banking for small-and-medium enterprises.
The probe could result in structural remedies, such as breaking up banks through divestments, or behavioural changes that may include improved transparency and the provision of better information to customers. The CMA will make a final decision on a market investigation in the autumn.
The largest four personal current account providers account for over 77% of the market in the UK, while the largest four providers for SMEs account for more than 85% of business current accounts and 90% of business loans.
"Competitive personal and SME banking markets are essential to households and businesses throughout the country, and to the success of the UK economy," CMA Chief Executive Alex Chisolm said in a statement. "However, our studies have found that despite some positive developments, significant competition concerns remain which mean that customers may not be getting consistently good service and value from their banks," Chisolm added.
The UK's largest high-street banks - Barclays PLC, HSBC Holdings PLC, Lloyds Banking Group PLC, Royal Bank of Scotland Group PLC, and Santander UK PLC - will be paying close attention to the development. Banking competition has become an important theme for regulators and lawmakers amid concerns that barriers to entry remain to high and that customers see little difference between the largest banks' service.
The CMA is the UK's primary competition and consumer authority. On April 1, it took over the functions of the Competition Commission and the competition functions of the Office of Fair Trading.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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