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CMA investigation into the banking sector should increase competition, says FSB Print E-mail
Friday, 18 July 2014

Commenting on the Competition and Market Authority’s (CMA) decision to launch a market investigation of the small business banking sector, John Allan, National Chairman, Federation of Small Businesses (FSB), said:

"The FSB welcomes the CMA’s decision to proceed with a market investigation of the small business banking sector. It has been nearly 15 years since competitions expert Donald Cruickshank criticised retail banks for overcharging small business customers for banking services and the structural issues that hampered competition.
 
“Since Cruickshank’s report, a few very large banks have dominated the market for small business accounts, which suggests that competition has remained limited. In addition, there continue to be a range of barriers to entry that either potentially deter entry to the market or block new entrants’ growth. This means small firms have not seen the full benefits of reduced costs, increased choice and better access to finance had these structural issues not been in place.
 
“The FSB therefore wants this investigation to focus on the ways in which barriers to entry for new banks - including alternative finance providers – could be reduced. The goal should be to deliver a market structure that encourages far more dynamism, choice and innovation. That should encourage the major high street banks to up their game for the small business customer. For example, supporting transparency across the banking sector by actively promoting the Business Bank Insight comparison website on the quality of bank products.
 
“While there has been some welcome progress to tackle these structural issues, the FSB believes progress has been limited and slow. By putting all these issues in one place, we hope this review will finally lead to the effective remedies”.

(Source - FSB Comment)
 

 

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