"Big four" banks' small business lending placed under official investigation by the Competition and Markets Authority

Joe Hall
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Britain's biggest banks will come under investigation (Source: Getty)
Britain’s biggest banks are to be thrust under the microscope by a watchdog launching an in-depth investigation into personal current accounts and small business lending.
The Competition and Markets Authority (CMA) believes the UK retail banking sector is failing its customers through a "crippling lack of competition and transparency".
HSBC, Barclays, Lloyds Banking Group, The Royal Bank of Scotland and Santander - often referred to as “the big four" - account for over 77 per cent of the market according to the CMA, which adds that there are barriers to entry and expansion for smaller banks.
Earlier this year Ed Miliband promised to “dismantle the big four" and force them to sell branches to at least two new challenger banks.
Miliband said in January: “We need a reckoning with our banks, not for retribution but for reform to tackle the cost of living crisis in this country.”
The CMA’s investigation will last 18 months. Today’s announcement comes after a period of consultation in which it sought responses to the investigation originally proposed in July.
Most respondents agreed there should be an investigation, a CMA statement said.
CMA chief executive Alex Chisholm added:
Effective competition in retail banking is critically important for individual bank customers, small and medium-sized businesses, and the wider economy.
After carefully considering the consultation responses, most of which supported a market investigation, we remain of the view that there should be a full market investigation into the sector, conducted by a Market Reference Group drawn from the CMA’s expert panel of independent CMA members.
The investigation will be welcomed by a number of challenger banks such as Virgin Money, TSB and Aldermore.
CEO of TSB, Paul Pester, said:
Consumers have been crying out for a root and branch investigation like this for years and we have previously said the CMA would be uniquely placed to carry out this complete review of the market. The Big Four banks have had a stranglehold on the market for far too long.
TSB was established to bring competition to the UK and with our full ‘bricks and clicks’ capability, we are already having an impact as the challenger with the sharpest teeth. Customers are voting with their feet – with one in every 10 opening a new bank account choosing TSB.
TSB believes the CMA investigation should focus on achieving greater transparency in banking along with more choice and competition, so consumers get a better deal.

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