The Times Katherine Griffiths Banking Editor
Last updated at 10:05AM, May 21 2015
Business and personal current account holders struggle with a lack of clarity and low expectations of the benefits of switching, according to the competition authority.
The Competition and Markets Authority (CMA) is investigating the current account market and could order banks to break themselves up if it finds a serious lack of competition. In an update on its study published today, the CMA said low levels of switching by both personal and business customers reflected the complexity of charges.
“Our initial view is that these low switching rates may not be consistent with a well-functioning market,” it said.
The body also highlighted that while customers are quite positive when asked about their bank, the numbers of who would actually recommend the lender to someone were much lower.
The CMA will publish its initial findings in September, followed by a final report next spring. The study could be bad news for Lloyds, which controls about 25 per cent of personal current accounts, and Royal Bank of Scotland, with more than a fifth of business accounts.
A raft of challenger banks have sprung up to try to take business away from the big banks, but have not yet captured a significant slice of the market.
If the CMA does call for there to be less concentration in the market it could also harm the governmemt’s plans to sell off more shares in Lloyds and potentially to start its sale of RBS shares.