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CMA launches bank account competition investigation


The Competition and Markets Authority (CMA) have announced a full competition enquiry into current account and small business banking markets, as they aim to boost competition in the high street.

The CMA will be investigating lack of transparency in the sector, as they believe complex overdraft charges make it tough for consumers to find the best deal. Fewer customers seem to be switching bank accounts, even after switching incentives and guarantees implemented by the government.

The big four UK banks, Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC still provided 77% of current accounts. The investigation will look at why there is still very little movement and low levels of switching in the market.

Recent figures from the Payments Council show there were 1.2m current account switches in the first year since seven-day bank switching incentive was launched, but this is small in relation to the 46 million accounts in the UK.

Almost half of UK bank customers who wanted to switch their current accounts were held back by the view other accounts would be no better, according to a survey by Accenture of 3,600 account holders.

Alex Chisholm, CMA chief executive, said:
"Effective competition in retail banking is critically important for individual bank customers, small and medium-sized businesses, and the wider economy.

"After carefully considering the consultation responses, most of which supported a market investigation, we remain of the view that there should be a full market investigation into the sector, conducted by a Market Reference Group drawn from the CMA's expert panel of independent CMA members.

"The Market Reference Group will investigate in detail and decide what action, if any, may be needed to improve competition for the benefit of personal and small business customers."

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