U.K. Competition Agency Won’t Probe Bank Checking AccountsErik Larson
A British competition regulator won’t seek a full investigation into the country’s 9 billion-pound ($14.2 billion) market for personal checking accounts after a review of difficulties faced by customers.
Upcoming changes in the market for so-called current accounts, including automated account switching and the sale of branches by Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, will make it easier for customers to compare services, the Office of Fair Trading said today.
The industry still needs “significant” changes to tackle long-standing competition concerns, the regulator said. “Since the OFT last looked at current accounts in 2008, the major banks have increased their share of the market, entry by new competitors remains infrequent and consumers still only rarely switch to an alternative provider.”
The decision by the London-based watchdog prevents the market from being referred to the U.K. Competition Commission for an in-depth probe, a development that could have led to a drawn-out legal fight and new rules for banks.
The OFT said there have been improvements to the accounts, including a decrease in unauthorized overdraft charges between 2007 and 2011 that have saved customers as much as 928 million pounds a year. The structure for such charges is still too complex, it said, and the market is hampered by low innovation and “customer apathy in the face of unclear costs.”
“Customers still find it difficult to assess which account offers the best deal and lack confidence that they can switch accounts easily,” Clive Maxwell, the OFT’s chief executive officer, said in a statement. “This prevents them from driving effective competition between providers.”
The British Bankers’ Association, a trade group, said the system for allowing customers to switch banks would start in September, and that it would work with the OFT to implement new changes to improve services for customers.
“The banking industry is committed to modernizing and improving current accounts so that customers get the best possible service,” Anthony Browne, the trade group’s chief executive officer, said in a statement.