The Competition and Markets Authority (CMA) is to launch a full inquiry into competition within the market for current accounts and small business banking.
The probe will be designed to assess the difficulties customers face such as switching banks and the overall lack of smaller competitors to the leading High Street banks.
After consulting with members of the public, banks and other industry bodies, the CMA outlined for key concerns about the UK’s banking services:
Few customers switch banks or shop around for the best rate possible
A lack of transparency and difficulties in comparing services from different banks
Barriers faced by smaller banks in attempting to enter the market
The continued dominance of the “big four” High Street banks
Some of the “big four” High Street names believe the probe is unnecessary. In a recent submission to the CMA, Barclays has said it feels the review is “not appropriate at this time”.
“Various developments, innovations and stimuli are changing the competitive landscape in relation to both [personal current accounts] and [small and medium enterprises] banking, and these must be given time to mature,” it added.
Meanwhile, Lloyds Banking Group, which remains partly owned by the UK taxpayer, said that although it will cooperate with the CMA, it “did not consider that such a reference is necessary”.
HSBC also spoke of its concern that the CMA had previously “taken a backward looking view” of both current accounts and small business lending.
A spokesperson for the British Chambers of Commerce said it welcomed the review.
“For many years Britain’s dysfunctional banking sector has struggled to meet the needs of [small and medium enterprises], impeding the growth prospects of some of our most promising young companies.”