OFT to probe current account market

The Office of Fair Trading has announced it will be probing the current account market, examining retail banking providers for competition and transparency issues that may be harming consumers.

With the Barclays Libor scandal and the RBS-NatWest service outage leaving many consumers with a decidedly bad taste in their mouths, the OFT says that ‘radical’ action could be taken if financial services providers do not begin to demonstrate they are shifting their focus to becoming more consumer focused and competitive. The watchdog has a laundry list of items that it would like the banking industry to improve upon, such as making their charges and fees more clear and making it easier to switch accounts from one provider to another, and the OFT has not hesitated to threaten the industry with going to the Competition Commission unless a marked improvement is made.

Banks have been under significant pressures to streamline the process for switching current accounts and savings accounts, but a recently conducted research study found that more than one out of every four Brits still feel that it’s too much trouble to switch providers – even though their existing provider isn’t offering the most competitive deals. Additionally, 20 per cent of survey respondents said they are actively looking to switch current account providers after the behaviour of some retail banks has left them less than enthusiastic about their providers.

The timing of the new OFT probe was not done to deliberately coincide with the recent furore in the banking sector, the watchdog said, even as it comes at the same time that many high street banks have seen a large number of their customers switching to building societies as an alternative. Instead, the new review will be used to gauge how much evolution has taken place since the last market study done by the watchdog in 2008.

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