Bank Probe Extended in U.K. After Lawmakers Attack `Lazy' Reviewby
CMA opens door to tougher remedies after wave of responses
Decision comes after findings attract the ire of politicians
The U.K.’s competition regulator opened the door to additional remedies for banks by extending an investigation into small-business lending and checking accounts that was dubbed "lazy" by lawmakers.
The Competition and Markets Authority’s provisional report generated "lively debate" and so many suggestions that investigators need more time to decide on the extent of changes the banks face, the regulator said in an e-mailed statement. The CMA will decide on the length of the extension by early March, when it will set out its timetable.
In November, lawmakers accused Alasdair Smith, the chairman of the banking inquiry, of allowing lenders "to pull the wool over their eyes" after the provisional findings stopped short of advocating a break up of the banks or an end to free checking accounts. The decision to extend the inquiry comes nearly a year after the Financial Conduct Authority was given powers to enforce antitrust laws.
"I think the competition authorities in the U.K. feel under a bit of political pressure after the changes in personnel at the Financial Conduct Authority and the provisional findings were somewhat of a damp squib." said Matt Evans, a London-based competition lawyer at Jones Day. "It gives them a chance to be seen to be taking this seriously."
The CMA will publish a working paper on the bank levy and corporation tax surcharge by the end of February, according to the statement. It will publish additional information on the affects of capital requirements on various mortgage lenders by the end of March.
Banco Santander SA told the CMA during a hearing on Dec. 9 that so-called ring-fencing rules and a corporation tax surcharge have a disproportionate effect on challengers to the big U.K. banks operating with lower margins, affecting their ability to compete.