The Office of Fair Trading (OFT) has launched a UK-wide review of barriers to entry, expansion and exit in retail banking, to identify any obstacles facing new entrants and smaller banks seeking to expand.
The extent of any barriers to entry, expansion and exit in retail banking will affect how the market now develops. Where new entry and expansion can occur quickly and efficiently, the OFT believes it is more likely that banks which fail to meet their customers’ needs will lose market share in favour of those that can.
The OFT is calling for evidence on the extent of any barriers affecting banking for personal customers and for SMEs. A paper published today sets out the anticipated scope for the review and describes the type of information being sought.
The OFT is asking interested parties to comment on:
* Regulatory requirements including obtaining authorisation from the FSA and capital and liquidity requirements
* Essential inputs such as access to payment systems and availability of credit risk information
* Barriers to achieving scale such as developing branch networks and customer inertia
* Barriers to exit and aspects of the operation of the Special Resolution Regime.
The OFT says it is particularly interested in hearing from established providers, new entrants and potential new entrants to the sector, industry associations and organisations representing consumers and SME customers.
Clive Maxwell, the OFT’s senior director for services, said: “The OFT is committed to encouraging competition within retail banking that benefits consumers through cheaper and better products or services.
