U.K. Banks May Require Antitrust Review, OFT’s Fingleton Says
U.K. banks may require a review by antitrust regulators to stoke sluggish competition and encourage retail customers to switch between financial providers, the head of the Office of Fair Trading said in a speech.
John Fingleton, the OFT’s chief executive officer, said regulators needed to see evidence that new banks were entering the market and that customers were moving between banks, according to prepared remarks for a speech in London.
“Without this the obvious question is whether the concentrated market structure of U.K. banking is the problem. And one way to consider this question is a reference” to the U.K.’s Competition Commission, Fingleton said.
The U.K. Parliament’s Treasury Committee in 2010 investigated possible barriers that blocked new banks entering the market, adding to probes by the OFT into overdraft fees and equity underwriting. Fingleton said the country’s banking industry has become more concentrated since the financial crisis forced the government to bail out and merge banks.
The U.K. brokered a takeover of HBOS Plc to create the U.K.’s biggest mortgage lender. It also bailed out Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc (LLOY) and Northern Rock Plc.
U.K. banks have “little incentive” to innovate, reduce costs or focus more on customers, Fingleton said. Richard Branson’s financial-services unit Virgin Money Ltd. and Tesco Bank have “real challenges to being successful” because customers rarely switch banks and have little information on fees.
The OFT will examine the market for personal current accounts later this year, Fingleton said.
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