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| 'Big Five' UK banks face full CMA competition probe | |
| (35 minutes later) | |
| Markets watchdog the Competition and Markets Authority (CMA) has recommended a full competition inquiry into banks. | Markets watchdog the Competition and Markets Authority (CMA) has recommended a full competition inquiry into banks. |
| The provisional decision recommends a full-scale inquiry into the banking sector including the provision of current accounts and business lending. | The provisional decision recommends a full-scale inquiry into the banking sector including the provision of current accounts and business lending. |
| The big five High Street banks, which provide 77% of current accounts, will be watching the CMA's decision closely. | The big five High Street banks, which provide 77% of current accounts, will be watching the CMA's decision closely. |
| The process will start with a consultation with the banking industry that will last until the 17 September. | The process will start with a consultation with the banking industry that will last until the 17 September. |
| Alex Chisholm, CMA chief executive, said: "Our studies have found that despite some positive developments, significant competition concerns remain which mean that customers may not be getting consistently good service and value from their banks." | |
| The main problems | |
| The CMA said many customers saw little difference between the largest banks in terms of the services they offer. | |
| Its study found that the number of consumers shopping around and switching between banks remained low. | |
| There was limited transparency and it was difficult for customers to make comparisons between banks, the CMA added. | |
| Current account overdraft charges were found to be very complex, making it harder for bank customers to choose the cheapest or most appropriate accounts for them. | |
| That in turn limited the banks' incentives to compete, which the CMA said may be leading to higher overdraft charges were there greater market competition. | |
| Past probes | |
| The CMA said that despite efforts by regulators to make the banking sector more competitive - including a faster current account switching regime introduced last year - competition was not effectively serving the interests of small businesses or current account customers. | The CMA said that despite efforts by regulators to make the banking sector more competitive - including a faster current account switching regime introduced last year - competition was not effectively serving the interests of small businesses or current account customers. |
| It added that it was still difficult for newer and smaller "challenger" banks to get into the industry, particularly in Scotland and Northern Ireland. | |
| The CMA pointed out there had been very little movement in the market share of the UK's biggest banks - Royal Bank of Scotland, Lloyds Banking Group, HSBC, Santander and Barclays - except through mergers and acquisitions. | |
| This forthcoming probe is the latest in a plethora of inquiries into the state of the UK banking industry going back nearly two decades: | |
| Christopher Woolard of the Financial Conduct Authority (FCA), which has been helping the CMA, said while there had been some recent improvements for small businesses, competition in the banking system still wasn't working as it should. | |
| "The market is still concentrated, switching between providers is low and those running small businesses don't believe there is much differentiation in terms of the products on offer and the standard of service they receive," he said. |