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Current account market scrutinised amid competition concerns
The OFT wants to know what improvements the banks have made for customers since its previous report in 2008.
The current account market is to be reviewed amid concerns that bank customers are losing out because of a lack of effective competition and customer focus.
The Office of Fair Trading (OFT) said it will look at what progress the banks have made since its report in 2008, assessing whether they have successfully improved their switching processes, increased transparency around account charges, and helped people to manage their accounts more effectively.
Over the next two years the OFT said it also intends to consider the way customers make decisions and engage with retail banking services, look at how payment systems work, and assess the banking market for small and medium-sized businesses.
The Independent Commission on Banking (ICB) said in September that the OFT should refer the banks to the Competition Commission by 2015 if sufficient improvements have not been made. The OFT said the review will help it respond to this recommendation.
Claire Hart, OFT director, said the regulator is ‘concerned that a lack of effective competition means the retail banking sector is not working in the interest of customers and businesses’.
‘We want to see banks become more customer-focused and this will be the central theme of our programme of work,’ she said.
Consumer groups have welcomed the investigation.
‘We’ve long held concerns that low levels of switching in financial services is a symptom of a sector which isn’t as competitive as it should be,' said Adam Scorer, director of external affairs at Consumer Focus.
‘Mis-selling, unfair charges, high levels of complaints, opaque products with complex terms and conditions, and a sector dominated by a handful of big banks and building societies are also signs that customers are not being well served,’ he added.
The OFT said it expects to publish its findings by the end of this year.
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