OFT to examine Retail Banking
9 Jun 2010:
Over recent months, we have seen potential changes underway in UK retail banking and the significant number of institutions looking to enter or enhance their offering to this market, including Metro Bank, Virgin, Tesco, and Walton & Co, following the banking crisis and the enforced sale of parts of the branch networks of Royal Bank of Scotland, Lloyds and Northern Rock. So it may seem a strange time for the UK competition watchdog, the Office of Fair Trading (OFT), to start a review looking at the barriers to entry in the retail banking market – but this is what they have done.
The review announced last week is to run over the summer, and will consider issues including specific regulation, payment systems (smaller banks typically have to work through one of the large clearing banks to get access to the major BACS, CHAPS and Faster Payments networks) and ability to deal with fraud and credit risk. Typically the major problems in this sector have been seen as customer inertia (once people are with a bank they are loathed to switch) and relatively low returns on retail banking business. Obviously the OFT believe there is a need to improve the situation for consumers, despite the positive signs that the competitive process is working with the significant number of new entrants to the market. Click HERE for more details on this review at the OFT website
Leave a Reply