British bank competition plan falls short of challenger hopes
By Andrew MacAskill and Huw Jones
LONDON (Reuters) - Long-awaited measures to break the market dominance of Britain's biggest banks, including a cap on fees for unauthorized overdrafts, were criticized on Tuesday by consumer groups as insufficient to boost competition.
The Competition and Markets Authority's recommendations, following a near three-year, 5 million pound ($7.2 million) probe into high street banking, shied away from radical measures like breaking up lenders or ending free in-credit banking.Regulators and lawmakers are keen to increase competition in a sector dominated by the four lenders -- Lloyds Banking Group (LLOY.L: Quote), Royal Bank of Scotland (RBS.L: Quote), Barclays (BARC.L: Quote) and HSBC (HSBA.L: Quote) -- which control more than three-quarters of current accounts and provide nine out of 10 business loans.
The CMA's proposals disappointed consumer groups, analysts and the new entrants in banking known as challenger banks which are bidding to poach market share from the biggest lenders. These include Secure Trust (STBS.L: Quote), Virgin Money (VM.L: Quote), Aldermore (ALD.L: Quote), Shawbrook (SHAW.L: Quote) and Metro Bank (MTRO.L: Quote).
"This inquiry achieved little more than to propose basic information measures that the big banks should have introduced years ago," Alex Neill, Director of Policy and Campaigns at Britain's largest consumer body Which?, said.
The British Bankers' Association (BBA), which represents the industry, was among the few groups to welcome the plans.
The CMA's report focused on improving transparency to give customers and small businesses more information to shop around, such as by forcing banks to join a price comparison website.
It also said bank charges were too complicated and many customers and small businesses, most of whom stay with the same lender for more than a decade, were unaware if they were getting good value for money.
To address this it proposed making it easier to move accounts by forcing banks to introduce technology so their customers' accounts history can be shared easily with rivals. Continued...