Personal Current Account Market Under OFT Scan
The Office of Fair Trading has launched a review of the personal current account market and outlined a longer term programme to address competition concerns and a lack of customer focus across the wider retail banking market.
The OFT committed to carry out this review of the personal current account market in March 2010.
The personal current account review will seek to establish how the market has evolved since the OFT’s market study in 2008. It will look at whether initiatives agreed by the OFT with banks have been successful at improving the switching process, increasing the transparency of personal current account charges and allowing people to manage their accounts more effectively.
The review forms part of a wider programme of work designed to achieve a more competitive and customer focused retail banking sector. As well as reviewing progress on current accounts, the OFT also intends over the next two years to consider the operation of payments systems and the banking market for small and medium-sized enterprises. It is also planning to look in more detail at the way in which consumers make decisions and engage with retail banking services, including through applying behavioural economics.
In September 2011, the Independent Commission on Banking recommended that the OFT consider making a market investigation reference to the Competition Commission by 2015 if it had not already done so, if sufficient improvements in the market have not been made by that time. The personal current account review and wider programme of work are aimed at informing the OFT’s response to this recommendation, although a reference remains a possibility at any time if the legal test is met.
Claire Hart, OFT Director said: “We committed to keeping the personal current account market under scrutiny following our 2008 study. Through this review we want to understand what progress banks have made in providing customers with better information about account charges, greater control over their accounts and easier account switching facilities.
“More generally, we are concerned that a lack of effective competition means the retail banking sector is not working in the interest of customers and businesses. We want to see banks become more customer-focused and this will be the central theme of our programme of work going forward.”
The OFT plans to publish its personal current account review by the end of 2012.