OFT boss warns banks of competition inquiry

 

Banks were yesterday warned that they could face a fresh investigation from competition watchdogs amid increasing concerns over the dominance of four big players.

John Fingleton, chief executive of the Office of Fair Trading (OFT), demanded a "step change" in the way banks do business.

Without this, he said, the OFT would consider a reference to the Competition Commission which could come in the next three years.

Mr Fingleton said in a speech yesterday the market – dominated by Royal Bank of Scotland, Barclays, Lloyds and HSBC – is over-concentrated and works against new entrants.

The credit crisis exacerbated this situation, not least because of the rescue of HBOS by Lloyds Banking Group brokered by the previous government. Competition rules were suspended to allow that deal to proceed.

The problems for companies seeking to enter the market were highlighted by Tesco's recent decision to delay the launch of its current accounts.

Mr Fingleton said he wants to work with the new Prudential Regulation Authority to ensure its requirements do not make life impossible for "new" entrants or challengers, such as Virgin Money or Metro Bank, by forcing them to hold too much cash in reserve.

But in a warning to the existing players he added: "For too long banks have needed pressure... from regulators and enforcers to introduce things they should already have been doing.

"It shouldn't need a super-complaint for banks to provide clear information to consumers on obvious areas such as the interest rate paid on their saving account or the charges they pay when using their cards abroad."

Banks are currently dealing with fallout from the Independent Commission on Banking which demanded that they ringfence retail operations from more risky investment banking.

"Going forward we need to see evidence which demonstrates that the market dynamics of entry and (current account) switching are sufficient to drive stronger, customer-focused competition," Mr Fingleton said.

He also said he welcomed proposals by the new Financial Conduct Authority to attach greater importance to the "customer experience" of banks.

"Many of the issues that competition authorities have been grappling with stem from a lack of customer focus," he added.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

The ZX Spectrum is back

The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

Even the screenwriter pours scorn on Grace of Monaco biopic

The critics had a field day after last year's premiere, but the savaging goes on
Menstrual Hygiene Day: The strange ideas people used to believe about periods

Menstrual Hygiene Day: The strange ideas people once had about periods

If one was missed, vomiting blood was seen as a viable alternative
The best work perks: From free travel cards to making dreams come true (really)

The quirks of work perks

From free travel cards to making dreams come true (really)
Is bridge the latest twee pastime to get hip?

Is bridge becoming hip?

The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
Long author-lists on research papers are threatening the academic work system

The rise of 'hyperauthorship'

Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

The rise of Lego Clubs

How toys are helping children struggling with social interaction to build better relationships
5 best running glasses

On your marks: 5 best running glasses

Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

'Ben Stokes gives everything – he’s rubbing off on us all'

Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

Please save my husband

As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada