Concern over competition in banking
Lloyds Banking Group's "powerful" position in the retail banking sector could be damaging competition in the UK, MPs have warned.
The part-nationalised bank's market share in some retail segments is almost double that of its nearest competitor, but there has been no assessment of the impact its standing has had on competition, according to a report from the Treasury Select Committee.
The Commons committee added that the European Union-imposed sale of 600 Lloyds branches may not be enough to address competition concerns, and said a public interest test based on competition should apply to the divestment and future sell-offs.
The committee's report, which concluded that competition in the sector is not working, comes ahead of the keenly awaited spring report from the Independent Commission on Banking (ICB), due on April 11.
The ICB is believed to be drawing up a radical approach to reforming the industry, which could include a recommendation to split banks between investment and retail arms. It has also been looking at a potential break-up of Lloyds following its rescue takeover of HBOS, which was rushed through at the height of the financial crisis.
The Treasury Select Committee took evidence from a wide range of banking industry figures including former Lloyds chief executive Eric Daniels, Barclays boss Bob Diamond and Royal Bank of Scotland head Stephen Hester.
The committee's report also claimed the sale of more than 300 Royal Bank of Scotland branches to rival Santander was a missed opportunity to inject more competition into the retail banking sector.
The committee also found a lack of price transparency in the current account market as well as difficulty in switching accounts, with committee chairman Andrew Tyrie saying: "For competition to be effective, customers need to know what they are buying, how much they are paying and to be able to transfer their custom from one provider to another without risk."
He added: "The chief executives of the large incumbents told the committee UK retail banking was enormously competitive, but a far larger range of witnesses described the industry as close to an oligopoly.
"We also received much evidence about low levels of consumer satisfaction and poor treatment of consumers by the major banks. We could not but conclude from this that competition in the UK retail banking market is not strong enough."