Banks call on preferred counsel for OFT probe

Competition lawyers are gearing up for round two of the Office of Fair Trading’s (OFT) investigation into the retail banking sector.

The major banks have turned to their longstanding counsel: Barclays instructed Clifford Chance, Lloyds TSB is being advised by Lovells, Royal Bank of Scotland (RBS) has instructed Ashurst and Linklaters, while HSBC is looking to Freshfields Bruckhaus Deringer.

The OFT announced on 30 March that it would widen the scope of an inquiry launched last September into current account charges.

The regulator’s chief executive John Fingleton said the OFT did not want to apply a quick-fix solution to the sector, which has already been hit, this time last year, by an OFT probe into credit card penalties.

Fingleton said quick fixes might have “unintended and far-reaching consequences across the whole sector”.

UK customers enjoy free banking, the costs of which are recouped by banks through penalties, such as overdraft charges. If these fees are curbed, banks may be forced to charge customers for free services such as cashing cheques.
At the same time consumer group Which? submitted a ‘super complaint’ to the OFT on 1 April after a study into the top credit card providers showed that annual percentage rates do not provide customers with a surefire like-for-like comparison.

The firms involved declined to comment, but one lawyer close to the investigation said: “Once a market study is launched, the OFT can ask pretty much anything they want and go in any direction they see fit.”