Barclays, RBS, HSBC and Lloyds may be forced to break up following a finance watchdog\u2019s inquiry. The watchdog claims Britain’s banking sector is characterized by anti-competitiveness and a failure to meet ordinary citizens and small business’ needs.<\/p>\n
Outlining its proposals for a sweeping 18-month investigation into Britain\u2019s major banks, the newly-established Competition and Markets Authority (CMA) has eclipsed its predecessors who were unwilling to launch an inquiry of this nature until 2015.<\/p>\n
Britain\u2019s \u2018big four\u2019 – Lloyds Banking Group, Royal Bank of Scotland (RBS), HSBC and Barclays \u2014 dominate the UK’s \u00a310bn-per-annum banking sector.\u00a0All four banks have been engulfed by scandal in recent years, yet they collectively control 77 percent of UK citizen\u2019s current accounts, 85 percent of UK small business\u2019 current accounts, and an overwhelming 90 percent of UK business loans.<\/p>\n
Two CMA studies, published on Friday, concluded core elements of the UK\u2019s\u00a0\u201cretail banking sector\u201d<\/em>\u00a0lack\u201ceffective competition\u201d<\/em>\u00a0and ultimately fail to meet the needs of personal consumers or small to medium-sized enterprises (SMEs).<\/p>\n The CMA\u2019s research revealed that while public satisfaction with these dominant banks falls shy of 60 percent, their market shares have remained steadfast. The studies concluded smaller banks with higher satisfaction ratings were simply unable to compete or acquire a sizeable share of the market.<\/p>\n Founded in April to supplant other UK watchdogs, the CMA has set in motion a consultation on their conclusion that SME customers and personal current account holders must contend with an inadequate service from their banks. The consultation will conclude on September 17.<\/p>\n \u201cCompetitive personal and SME banking markets are essential to households and businesses throughout the country, and to the success of the UK economy. However, our studies have found that despite some positive developments, significant competition concerns remain which mean that customers may not be getting consistently good service and value from their banks,<\/em>\u201d Alex Chisholm, CMA\u2019s chief executive, said.<\/p>\n The CMA\u2019s plans to launch the investigation have emerged at a time when scrutiny of the UK\u2019s banking sector is gathering momentum in Britain\u2019s political ranks.<\/p>\n Labour leader Ed Miliband, has vowed to back a competition investigation if elected in next May\u2019s general election. And Shadow Chancellor Ed Balls emphasized the need for widespread reform on Friday.<\/p>\n “As we said earlier this year, in the next parliament we need to see at least two new challenger banks and a market-share test to ensure the market stays competitive for the long term<\/em>,” Balls said.<\/p>\n If the CMA investigation is officially launched in September, it will continue beyond the election.<\/p>\n \u201cOur provisional view is that a full market investigation by an independent, expert CMA group is necessary to look at this market in detail and identify appropriate measures if competition concerns are found\u201d<\/em>, the CMA said.<\/p>\n National Chairman of the Federation of Small Businesses John Allan cautions against an effective monopoly held by Britain\u2019s biggest banks, outlining its detrimental effect on small businesses.<\/p>\n “Since Cruickshank’s report, a few very large banks have dominated the market for small business accounts, which suggests that competition has remained limited. In addition, there continue to be a range of barriers to entry that either potentially deter entry to the market or block new entrants’ growth,<\/em>\u201d he said.<\/p>\n \u201cThis means small firms have not seen the full benefits of reduced costs, increased choice and better access to finance had these structural issues not been in place,<\/em>” he concluded.<\/p>\n The British Bankers’ Association (BBA) argues there are currently substantial changes underway. The banking sector association recently published an array of proposals it claims would encourage and facilitate the growth of new and emerging UK banks. While the organization hoped regulators and politicians would be amenable to its suggestions, the CMA concluded a full-scale inquiry is necessary.<\/p>\n Ethical banking campaign group Move Your Money welcome the CMA\u2019s planned probe.<\/p>\n “We’ve been saying this for years. Simply, people want real alternatives. This is something the big banks would have you believe don’t exist, but they do\u201d<\/em>, Charlotte Webster, campaign manager for the group said on Friday.<\/p>\n \u201cMillions have switched banks in the last year,\u201d<\/em>\u00a0and a dramatic shift from a monopolized banking sector to one characterized by diversity and ethics is crucial, according to Webster. A full range of the UK\u2019s banking providers can be found on Move Your Money\u2019s ethical banking scorecard.<\/p>\n In theory, an inquiry could order a full-scale break up of Britain\u2019s largest banks. But such comprehensive reform is rare. Following the inquiry, the CMA will most likely demand banks cultivate new networks of branches and adopt greater levels of transparency with respect to their charges.<\/p>\n This planned investigation is the 10th analysis of the market since Don Cruickshank was commissioned to examine the industry by then-Prime Minister Gordon Brown in 1999. Former investment banking correspondent at the Financial Times, Chris Hughes, states UK banks \u201chave much to fear\u201d from the CMA probe.<\/p>\n This piece<\/a> was reprinted by RINF Independent News<\/a> with permission or license.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Barclays, RBS, HSBC and Lloyds may be forced to break up following a finance watchdog\u2019s inquiry. The watchdog claims Britain’s banking sector is characterized by anti-competitiveness and a failure to meet ordinary citizens and small business’ needs. Outlining its proposals for a sweeping 18-month investigation into Britain\u2019s major banks, the newly-established Competition and Markets Authority […]<\/p>\n","protected":false},"author":1,"featured_media":131712,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[487,52],"tags":[],"class_list":{"0":"post-131711","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-breaking-news","8":"category-money"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/131711","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=131711"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/131711\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media\/131712"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=131711"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=131711"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=131711"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}