UK banks avoid investigation by competition authority
By Matt Scuffham
LONDON (Reuters) - Britain's biggest banks were spared a full-blown inquiry into the personal current account market after the consumer watchdog said changes already being implemented could stimulate competition in the industry.
The Office of Fair Trading decided not to refer the industry to the Competition Commission for the time being, highlighting new rules being implemented to make it easier for customers to switch accounts and branch sales by state-backed Lloyds Banking Group (LLOY.L: Quote) and RBS (RBS.L: Quote) which will create new banks.
Britain's 'Big 4' lenders - Lloyds, RBS, Barclays (BARC.L: Quote), and HSBC (HSBA.L: Quote) - control about three quarters of the current account market, worth about 9 billion pounds ($13.7 billion) per year, and lawmakers are keen to encourage greater competition.
The OFT said on Wednesday it still had significant concerns about the market and would consider again whether there were grounds for a competition inquiry in 2015 at the latest. However, it noted that there had been a significant reduction in overdraft charges since a previous study in 2008.
To avoid a new inquiry, the OFT wants banks to be more customer-focused and for customers to be better informed and to have a greater choice of banks to choose from. The OFT also wants it to be easier for new banks to enter the industry.
A committee of British lawmakers, tasked with recommending measures to improve banking standards, is expected to put competition at the heart of its proposal when it publishes its final report next month.
In September, new measures will be introduced giving banks a strict seven-day deadline to enable customers to move to a rival bank should they wish to do so. Customers have traditionally been reluctant to move because of the complications involved.
In addition, start-up banks in Britain will not need as much capital as their established rivals from next April. Continued...