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Update on CMA Banking Market Investigation: CMA publishes issues statement and announces timetable and market reference group members

  • United Kingdom
  • Competition, EU and Trade
  • Financial services and markets regulation
  • Financial institutions


Further to the Competition and Markets Authority (the CMA)’s decision of 6 November (see here) to open an in-depth market investigation into the supply of retail banking services to personal current account (“PCA”) customers and to small and medium-sized enterprises (“SMEs”) the CMA has today: published its issues statement; announced the names of those from the CMA’s panel of independent members who will make up the Market Reference Group; and published the timetable for the market investigation. 


The CMA has indicated that it will publish its final report in April 2016.  This complies with the 18 month deadline imposed on the CMA by statute which would require publication of the report by 5 May 2016, 18 months after the reference to the CMA board on 6 November 2014.

The CMA has also announced a number of interim dates, including that it will publish relevant working papers and an annotated issues statement between March and June 2015 and that it will publish its provisional decision on remedies (if required) by January 2016 (the full timetable can be found here).

Market Reference Group (“MRG”)

The investigation will be conducted by a Market Reference Group (“MRG”), comprised of individuals from the CMA’s panel of independent members, and will be chaired by Alasdair Smith, one of the CMA’s designated inquiry chairs. 

Issues statement

The issues statement, which provides a framework for the market investigation, is based on evidence the CMA has reviewed to date and sets out its initial hypotheses of what features, if any, of the supply of retail banking services might give rise to an adverse effect on competition (“AEC”) and what might be the adverse out comes of any such AEC(s). 

The CMA has identified three groups of high-level hypotheses, or “theories of harm”, that “may explain” how certain market characteristics (or combinations of characteristics) may be adversely affective competition and leading to possible adverse outcomes:

  1. Theory of harm 1: Impediments to customers’ ability to effectively shop around, choose and switch products or suppliers, resulting in weak incentives for banks to compete for customers on the basis of price, quality and/or innovation.
  2. Theory of harm 2: Concentration giving rise to market power of some banks leading to worse outcomes for customers.
  3. Theory of harm 3: Barriers to entry and expansion leading to worse outcomes for customers.

The CMA has invited parties to tell the CMA if they believe that the issues identified should not be in the scope of the market investigation or if there are further issues which should be considered. The deadline for submissions is 3 December 2014.

Review of the behavioural undertakings given by 9 banks in relation to SME banking in 2002 and 2003

In addition to considering the CMA’s concerns about the effectiveness of competition in the retail banking and supply of personal current accounts markets, the MRG panel members will 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 CMA has said that it will issue its provisional decision in this respect in September 2015 and its final decision in April 2016, following receipt of all parties’ responses/submissions in February 2016.