Competition and Choice in Retail Banking

Competition and Choice in Retail Banking

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In this report the Treasury Committee concludes that the pre-conditions for effective competition in the retail banking market are not present. The Committee highlights in particular a lack of price transparency and comparability in the personal current account market, as well as the difficulty of switching. The report calls on the Government to make competition a primary objective of the new regulatory body, the Financial Conduct Authority (FCA). It also recommends a qpublic interest testq based on competition considerations for proposed future divestments of Government-held stakes in the banks. Given the continuing importance many consumers attach to a branch network, especially for current account services, the report notes that new entrants without access to an extensive branch network will be at a considerable disadvantage to established banks for the foreseeable future. This means that the Government needs to examine carefully where it can help improve the conditions for effective competition. New entry and reductions to barriers to entry and expansion may alone prove insufficient to tackle the problem of ineffective competition. As a result, the Committee urges the Independent Commission on Banking (ICB) to examine seriously whether there is a case for further structural reforms, over and above the RBS and Lloyds Banking Group divestments, to reduce concentration and promote competition. Solving the 'too big to fail' problem is critically important from a competition as well as a financial stability perspective.We took evidence from three new or growing entrants to the sector: Metro Bank, Virgin Money and Tesco Bank, who are ... It now has over two and a half million customers and offers a range of financial products, including credit cards, savings anbsp;...

Title:Competition and Choice in Retail Banking
Author: Great Britain. Parliament. House of Commons. Treasury Committee
Publisher:The Stationery Office - 2011-04-01

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