LONDON — A British regulator reported it is launching an inquiry into the “dominant” position of the country’s largest lenders in the retail banking sector, especially in lending to small and midsize businesses.
The Competition and Markets Authority said it is launching a review about the effectiveness of competition in the sector, citing what it said are low numbers of customers switching their accounts, the lack of transparency for consumers seeking to compare accounts among banks, and continuing barriers to entry and expansion by smaller lenders.
The four largest banks in Britain--the Lloyds Banking Group, Barclays, the Royal Bank of Scotland and HSBC – account for more than three-quarters of all consumer and business accounts in the U.K., and there has been very little movement over time in their market shares, according to the regulator.
A panel of independent experts is to be appointed to conduct the inquiry, a timetable for which has yet to be announced.
In recent years the government has been encouraging more competition in the retail banking sector, including more support for credit unions. But the U.K.’s credit unions remain relatively small, and most of the recent attention to credit unions has been as an alternative to payday lenders.