The big four banks are bracing themselves for a strong attack from Don Cruickshank, head of the Government's banking review, when he unveils his long-awaited report on the banking sector on Monday.
Bankers say they expect the document, 16 months in preparation, to be highly critical of the level of profits in the industry. They also expect Mr Cruickshank to recommend that certain areas of concern be referred to the Competition Commission, guaranteeing that the banks will be subjected to further detailed scrutiny. "This is likely to be highly price sensitive," a senior banker said yesterday.
The issues highlighted in discussion between Mr Cruickshank and the banks include mobility of current accounts and the stranglehold of the big four - Barclays, HSBC, Lloyds TSB and NatWest - over the clearing system that handles payments through the UK.
Mr Cruickshank is also believed to harbour concerns over the lack of competition in the business lending market, dominated by the big four.
One key concern that emerged in discussions with the heads of the banks is the lack of transparency of many banking products, which results in many customers sticking with their existing banks when in truth they could get a better deal elsewhere.
One senior banker said last night: "He is concerned that the banks seem to hold all the cards as far as the profitability of many banking products is concerned and that customers are frequently in the dark."
The report is also likely to recommend a series of measures to tackle some of the problems that e-commerce has thrown up in relation to banking. These include the need for paper signatures to back up electronic transactions, which undermines much of the benefit of digital banking.
Mr Cruickshank has already made public his views on ATM (automatic teller machine) charges. He believes that the £1 charge the big high-street banks are seeking to impose on non-customers who withdraw cash from their machines is well in excess of the cost of processing the transactions.
Last month's meeting of Link, the national cash-machine network, went some way towards meeting Mr Cruickshank's concerns, agreeing to allow non-banks to offer ATM services for the first time.
The banks have been highly critical in public and in private over the way the banking review has been conducted. They have argued that the plethora of so-called new entrants into the savings, mortgages and credit-card market has created one of the most highly competitive markets. However, much of that competition is focused on the retail market where margins are still relatively high by international standards.
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