Britain’s big banks could be broken up after the country’s new competition watchdog said it plans to launch a full investigation into services for small business customers and personal current accounts.
The Competition and Markets Authority (CMA) said today there was a lack of competition among banks and proposals lenders put forward to increase transparency and make it easier to switch did not go far enough to meet the needs of personal consumers or small and medium sized enterprises (SMEs).
The CMA can order structural remedies, such as breaking up banks considered too dominant, and behavioural remedies, such as improving information given to customers.
State-backed banks Lloyds Banking Group and Royal Bank of Scotland are the biggest banks for both personal current accounts and SME banking, and could come under pressure to reduce their market share.
The CMA had been expected to launch a full probe into SME banking, but it was less certain it would propose a wide-ranging investigation of current accounts.
It said it will make a final decision in the autumn and has given banks and other market participants until September 17 to submit their views.
The UK’s big four banks, which also include Barclays and HSBC, had proposed to improve competition in SME banking by setting up a comparison website to increase transparency and make it easier for companies to switch banks, but the CMA said it would prefer to conduct a full investigation.