Banks get reprieve on current accounts

  • @ukmoneyguru

Britain's high street banks have been let off the hook by the Office of Fair Trading, which has decided not to refer them to the Competition Commission over the current account market.

The OFT has been investigating the banks over whether or not they put barriers in the way of consumers looking to switch current accounts.

The big four – Lloyds, RBS, Barclays and HSBC – control 75 per cent of the current account market.

Recently the banks have promised to cut the amount of time it takes to switch between current account providers to seven days – at the moment it takes four weeks on average. In addition, charges levied on accounts have significantly dropped since the OFT last looked at the sector in 2008.

The OFT said that, although it still had "significant concerns" about the current account market, it would not be referring the industry to the commission. It will re-examine the issue in 2015.

Consumer groups expressed disappointment at the decision.

Richard Lloyd, executive director of Which?, said: "Further action by the competition authorities still looks inevitable. The changes already under way in retail banking are simply not enough to transform shoddy customer service or prevent banks charging unfair fees."

Wider competition in high street banking is proving difficult to stimulate with the deal between Lloyds Banking Group and the troubled Co-operative Bank to buy 600 branches collapsing last month and new entrants such as Virgin Money and Tesco Bank so far having a very limited impact.

Mr Lloyd added: "Everyone agrees that a big change is needed in banking. The collapse of Lloyds' branches sale to the Co-op was a further setback to the Government's efforts to tackle the unhealthy dominance of our biggest banks.

"Greater competition is urgently needed on the high street to make the banks work for customers, not bankers."