UK banks are again facing potential break up after the Competition and Markets Authority recommended an investigation into the £8 billion current account and £2 billion business account markets.
The recommendation followed a joint review of the small and medium sized enterprise market conducted with the Financial Conduct Authority and the CMA’s own work on current accounts.
‘The market studies have identified a number of common concerns, together with evidence that competition is not effectively serving the interests of SMEs or [current account] customers,’ said the CMA.
‘Barriers to entry and expansion for newer and smaller banks remain significant and the markets remain concentrated, particularly in Scotland and Northern Ireland.
‘There is very little movement in the market share of the largest banks (other than as a result of mergers and acquisitions)… Many customers see little difference between the largest banks in terms of the services they offer.’
Critically, the FCA added that the investigation will be extended to include the newly-created Payment Systems Regulator ‘given the links between payment systems and competition in retail banking’.
Ownership of the payments transmission system by the big incumbent banks has been widely recognised as a major barrier to new entrants.