Lesley Farrell, partner at Eversheds, has commented on the news that UK banks are facing a full-scale Competition and Markets Authority (CMA) probe. She said: ‘The CMA considers that there are similarities in the competition issues that arise in relation to both personal current accounts and SME lending and is proposing a “joined-up in-depth review” of both sectors.’
According to Farrell, common issues are high levels of concentration in the markets and significant barriers to entry for newer and smaller banks, low levels of shopping around and switching between banks by consumers and limited transparency in relation to banks’ offers.
She added: ‘In the event that a market investigation reference is made in the autumn, a panel of independent members of the CMA will undertake a detailed and lengthy review with a view to determining whether there are market features that prevent or restrict competition in the supply of these banking services. As such, anyone looking for a swift resolution to the issue may well be disappointed.
‘The CMA has a wide discretion in relation to the remedies it may adopt in order to address any competition issues it identifies, but the appropriateness of any remedies will need to be considered in the context of any developments that occur in the market [including regulatory changes] during the investigation period.’