Lloyds Banking Group chief executive Eric Daniels, whose bank faces the possibility of being broken up by the government, denied that the UK market was made uncompetitive by four of the top banks having 73 per cent of the current account market.
“Concentration does not lead to lack of competition,” he said, adding that in other countries the market offers far less choice.
The “great majority” of Lloyds’ customers were satisfied with their account service, he said.
Lloyds alone provides almost 30 per cent of current accounts in the UK, since its controversial acquisition of HBOS during the dark days of the banking crisis.
RBS chief executive Stephen Hester told the Treasury Committee that the size of UK banks was a “red herring”.
But the bank bosses were taken to task over issues of the portability of current accounts and a supposed lack of transparency over fee structures.
Moving accounts between banks could take between four and eight weeks, the bankers said.
After the session, select committee member Andrea Leadsom told City A.M. that evidence showed bank customers often wanted to change accounts but wouldn’t because it was “so much trouble”.
“The issue is the complexity of switching bank accounts,” she said.
Leadsom also complained about the “really shocking” lack of transparency over bank fees.
“Nobody has a clue what they are paying for their current account,” she said. “If people knew how much interest they were foregoing they might be more inclined to switch bank.”
Tesco Bank chief executive Benny Higgins suggested many consumers did not switch banks because they did not know how much their current account cost them.
But RBS and Lloyds denied they overcharged customers in areas such as overdraft interest rates.
The Independent Commission on Banking is also due to meet to discuss retail banking issues next Monday with former Barclays chief executive Martin Taylor as chair.