UK banks face break-up threat as watchdog plans competition probe

Fri Jul 18, 2014 7:12am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Steve Slater

LONDON (Reuters) - Britain's big banks could be broken up after the country's new competition watchdog set out plans for an 18-month investigation into services for small business customers and personal accounts because of a lack of competition.

The Competition and Markets Authority said banks have not done enough to meet the needs of retail customers or small and medium-sized businesses, such as making it easier to switch banks or providing clear information on fees.

The review will mark the latest attempt to open up banking in Britain to more competition and is also likely keep the banks in the political spotlight ahead of next year's election.

The CMA, which became Britain's new competition watchdog in April, has the power to order a break up of banks considered too dominant, as well as so-called behavioral remedies, such as improving information given to customers.

State-backed Lloyds Banking Group and Royal Bank of Scotland, the biggest banks for both personal accounts and business banking, are most at risk of being told to cut their market share, potentially by selling more branches.

"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," Alex Chisholm, CMA chief executive, said.

A full investigation had been widely expected. It would take about 18 months, so it would be early to mid-2016 before any remedies were proposed.

Britain's big four banks, which also include Barclays and HSBC, hold 77 percent of the 65 million personal current accounts in Britain, and have 85 percent of the 3.5 million business current accounts and provide nine out of every 10 business loans, the CMA said.   Continued...

 
Pedestrians walk past a branch of Lloyds bank in central London February 13, 2014.  REUTERS/Paul Hackett