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CMA announces market investigation into UK retail finance market

  • United Kingdom
  • Competition, EU and Trade
  • Financial services disputes and investigations
  • Financial institutions


The Competition and Markets Authority (the CMA) has today confirmed its provisional decision of 18 July 2014 to open an in-depth market investigation into the markets for SME retail banking and the supply of personal current accounts.  The confirmation of the decision follows a public consultation where, the CMA says, most respondents agreed that there should be a market investigation.  The CMA inherited a market study into SME banking from the OFT and has been working closely with the FCA in relation to the study. 

Competition concerns

The CMA has a number of concerns about the effectiveness of competition in the markets, including:

  • low levels of customers shopping around and switching;
  • limited transparency, and difficulties for customers in making comparisons between banks, particularly for complex overdraft charges on personal current accounts;
  • continuing barriers to entry and expansion into the sector, limiting the ability of smaller and newer providers to develop their businesses; and
  • very little movement over time in the market shares of the 4 largest banks, which provide over three-quarters of personal and business current accounts.

Conduct of the investigation

The investigation will be conducted by a Market Reference Group (“MRG”), comprised of individuals from the CMA’s panel of independent members .  Once the MRG is appointed it will announce a timetable for the investigation, which will last for a maximum of 18 months.  As part of the investigation, the MRG will prepare and consult on an “issues statement” which will detail the proposals for the focus of the investigation.

In addition to considering the CMA’s concerns about the effectiveness of competition in the markets, the MRG panel members will also review the undertakings put in place after the Competition Commission’s 2002 report into SME banking, to decide whether they should be varied or terminated.

The MRG will investigate what, if any, action may be needed to improve competition in the markets.  The CMA has a wide discretion in relation to the remedies it can 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 which occur in the market (including regulatory changes) during the investigation period.