Belfast Telegraph

Probe could lead to major shake-up in high street banking

By Vicky Shaw

Britain's biggest banks are facing up to 18 months of uncertainty after the competition watchdog ordered an investigation into their stranglehold over high street banking.

The Competition and Markets Authority (CMA) will press ahead with an in-depth inquiry into the personal current account and SME (small and medium enterprise) retail banking sectors, despite protests from the banks.

Groups representing consumers and businesses and smaller market players welcomed the prospect of the dominance of major banks being challenged - although the investigation could take up to 18 months to complete.

Aodhan O'Donnell, interim chief executive of the Consumer Council in Northern Ireland, said he hoped the probe would lead to changes in the personal current account system, and said customers here had less choice than other parts of the UK.

"We want this investigation to ensure the banks work harder to secure and retain customer confidence," he said.

The 'big four' UK banks being investigated are Lloyds, Ulster Bank parent Royal Bank of Scotland, Barclays and HSBC.

However, all other banks will be subject to the enquiry - so that will also embrace Northern Ireland's big four lenders, Danske, Bank of Ireland, First Trust and Ulster Bank.

Mr O'Donnell said: "Northern Ireland's 'big four' banks offer consumers current accounts with marginal or zero interest on credit balances and the mix of charges across accounts is very complex - making it difficult to compare products".

The probe will be carried out by a group which will decide if there are problems which prevent, restrict or distort competition in the sector.

If it finds there are, it will come up with remedies.

The CMA has wide-ranging powers which can be used in cases where they are deemed necessary, including forcing firms to change behaviour or alter their structure and shaking up whole markets.

The competition watchdog said there has been "very little movement" in the market shares of the four largest banks in the UK.

Levels of customers switching accounts have remained low despite efforts to encourage more shopping around.

Only about 4% of SMEs switch bank every year. The big four banks collectively supply more than three quarters (77%) of the personal current account market.

Belfast Telegraph

Popular