Report into UK banks fails to impress
Print Edition
LONG-AWAITED measures to break the market dominance of Britain’s biggest banks, including a cap on fees for unauthorized overdrafts, were criticized yesterday by consumer groups as insufficient to boost competition.
The recommendations made by the Competition and Markets Authority, following a near three-year, 5-million-pound (US$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 Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC, 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 new entrants in the banking industry — known as challenger banks — like Secure Trust, Virgin Money, Aldermore, Shawbrook and Metro Bank.
“This inquiry achieved little more than to propose basic information measures that the big banks should have introduced years ago,” said Alex Neill, director of policy and campaigns at Britain’s largest consumer body Which?.
The British Bankers’ Association was among the few groups to welcome the plans.
The CMA’s report focused on improving transparency to give customers more information to shop around, such as by forcing banks to join a price comparison website. It also said charges were too complicated.
Stakeholders have until June 7 to submit feedback on the proposals before a final report is published in August, with the remedies likely to be introduced early next year.
“I don’t think the CMA’s decisions will shake the foundations of UK banking,” said Phillip Monks, head of Aldermore.
The CMA decided against more radical measures such as allowing customers to keep their bank account number when they switch lenders, saying this was too expensive.
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