Investigators from the Office of Fair Trading launched a surprise raid on Royal Bank of Scotland offices that was prompted by a whistleblower-style complaint from Barclays, it emerged yesterday.
The OFT launched an investigation into "alleged anti-competitive conduct" at the two banks in March, after Barclays informed the regulator it had received approaches it "regarded as inappropriate" from RBS. Investigators from the regulator subsequently visited both Barclays and RBS on 21 May, though only Barclays was warned in advance to expect the officials.
The probe centres on the banks' divisions that offer loans and other services to professional services companies such as lawyers and accountants. It is understood that Barclays staff have told the OFT that they were approached by RBS employees with suggestions about the sharing of information on such products.
Collusion on prices is a serious criminal offence under competition laws and any charges would be embarrassing for both Barclays and RBS. Having initiated the investigation, Barclays would expect to avoid punishment were any breaches of the law uncovered at the bank, but the maximum penalty for price fixing is 10 per cent of a company's worldwide annual turnover.
A spokesman for the OFT said: "The OFT can confirm it has launched a Competition Act investigation into alleged anti-competitive conduct in the financial sector. The investigation has a narrow focus, relating to the provision of loan products to professional services firms and is limited to two parties.
"The OFT's investigation is at an early stage. The OFT will not be in a position to conclude whether the law has in fact been broken until it has completed its investigation and assessed the available evidence."
A spokesman for Barclays added: "Barclays recently became aware that certain members of its Professional Services team in Barclays Commercial Bank had been approached from outside Barclays in a manner which we regarded as inappropriate... The [OFT] investigation is operating within the confines of the Professional Services banking area and we believe that, if there is any issue, it starts and stops there."
Royal Bank of Scotland said: "As the OFT has stated they are in the early stages of an investigation. We are, as always, co-operating fully with the regulatory authorities, and it would therefore be inappropriate to comment further."
The OFT's investigation is likely to take some time to conclude and will run parallel to a separate probe into the whole of the banking industry, which is focusing on the charges paid by consumers. This probe includes an investigation into whether banks have been unlawfully overcharging customers who breach their overdraft limits and could eventually result in consumers receiving compensation payments worth several billion pounds.
John Fingleton, director-general of the OFT, has won a reputation for being prepared to take on Britain's biggest companies. In the past two years, the regulator has launched price fixing inquiries in the construction, dairy, retail and tobacco sectors that focus on allegations that hundreds of companies have colluded at the expense of their customers.
However, the inquiry into Barclays and RBS is more akin to the probe into alleged price fixing on fuel surcharges in the transatlantic air travel market, where complaints by Virgin prompted an inquiry that eventually saw British Airways fined £270m by the OFT. Virgin, as the instigator of the inquiry, escaped punishment.Reuse content