The Treasury Committee has announced a major inquiry on competition and choice in the banking sector.

The inquiry will follow the recent OFT investigation into into unauthorised overdraft charges and equity underwriting. The Government has also appointed an Independent Commission on Banking. This inquiry will build on work done by the Committee in the previous Parliament on the banking crisis, the structure of the banking industry, and consumer issues.

The Committee’s inquiry may assess the impact of the credit crunch on competition and choice in both retail and wholesale markets and the impact of widespread consolidation among banks and mutuals.

It may also look at the key barriers to entry inhibiting increased competition – including regulation and whether competition is inhibited by difficulties faced by customers in accessing information about product.

The Committee says the inquiry may also explore the Government and competition authorities’ strategy to increase competition in banking, including the likelihood that new entrants will successfully enter the market, as well as considering both the relationship between competition and financial stability and the impact of free banking on effective competition.