U.K. Banking Isn't Competitive Enough, Says Regulator
22 October 2015 - 7:10PM
Dow Jones News
The U.K.'s antitrust regulator on Thursday said Britain's retail
banking market isn't competitive enough, but held back from forcing
the country's big lenders from making any radical changes to their
businesses.
The Competition and Markets Authority published the preliminary
findings of its probe into consumer checking accounts and banking
services to small businesses, an investigation some feared may lead
to the breakup of the country's biggest banks.
In its interim findings the CMA said that too few customers are
switching accounts and that banks "do not have strong enough
incentives to work hard to compete for customers through better
products or cheaper prices." The CMA said banks should focus on
helping and encouraging customers to switch accounts. The antitrust
authority also held back from ending free-in-credit banking saying
that it saw no evidence that it distorted competition. Instead it
said that banks should implement various price comparison tools so
that customers are aware how much they are paying for their banking
products.
The CMA will now discuss its findings and any possible remedies
ahead of publishing its final report in May 2016.
U.K retail and business banking is dominated by four banks:
Lloyds Banking Group PLC, Royal Bank of Scotland Group PLC,
Barclays PLC and HSBC Holdings PLC. Last year they held
approximately 70% of personal current accounts and 80% of business
accounts in the U.K., the CMA said.
The outcome of the probe is a success for incumbent banks who
have argued that the rise online competitors and newly founded
challenger banks is already rendering the market more
competitive.
The CMA pointed to a number of potential changes to the £ 16
billion personal and small business account market. The CMA
suggested customers receive prompts to change banks, caused by
certain "triggers," such an IT failure or a major complaint. It
also said banks and payments operators should do more to promote
the country's current account switching system.
The CMA is also keen for customers to get a better idea of how
much they are paying for their banking services. It suggested that
banks make it easier to format customer data so it can be plugged
into price comparison websites or shared with competitors.
It also called for more transparency on the charges banks impose
on customers.
Write to Max Colchester at max.colchester@wsj.com
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(END) Dow Jones Newswires
October 22, 2015 03:55 ET (07:55 GMT)
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