UK banks face break-up threat as competition probe launched

Thu Nov 6, 2014 5:40am EST
 
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By Steve Slater

LONDON (Reuters) - Britain's big banks could be broken up after the country's competition watchdog launched a full-blown investigation into services for small business customers and personal accounts because of a lack of competition.

It marks the latest step by authorities to break the dominance of the country's big four lenders and is likely to keep the industry in the political spotlight ahead of next year's election and beyond.

The Competition and Markets Authority (CMA) said on Thursday banks had 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 investigation was welcomed by consumer and business groups and some of the smaller banks.

"This investigation represents a unique opportunity which must be seized, in order to deliver real change in the banking sector," said John Longworth, director general of the British Chambers of Commerce.

"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."

The investigation, which may take until May 2016 to complete, had been expected after the CMA said in July a full probe was on the cards. [ID:nL6N0PT1GL]

Since the 2007/09 financial crisis, UK politicians and regulators have tried to improve the safety and conduct of banks. The CMA's investigation marks the first major move to improve competition.   Continued...

 
A sign for Bank Street and high rise offices are pictured in the financial district Canary Wharf in London October 21, 2010.   REUTERS/Luke MacGregor