Many of the best business bank accounts on High Street banks are facing major inquiries into a distinct lack of competition amongst the country’s leading business loan lenders.
The Select Committee of the Commons will additionally be debating whether free business bank accounts – in which consumers do not pay charges to operate their accounts – is still viable in the future.
This inquiry will complement a Banking Commission headed by former Office of Fair Trading chairman Sir John Vickers. The independent commission was announced by Chancellor Osborne in June.
A number of bank mergers have occurred since the inception of the global economic crisis, leading banks on High Street to have a much fewer number of owners; Santander has grown significantly by acquiring several UK lenders, while Lloyds now possesses roughly one third of the banking market.
Treasury Select Committee chairman Andrew Tyrie announced his plans to delineate the inquiry in more detail, stating that the concerns surrounding the lack of competitive options in the banking sector are widespread.
Tyrie continued, stating the intention of the Treasury Select Committee to examine the issues of not only competition but also the viability of free banking. The Committee will be examining the commitments currently made by banks to foster competition to ensure that those banks do indeed deliver on their promises, whether those commitments do enough to further the goals of increased competition, and whether there are other avenues that can be explored to achieve those goals.
In a recent speech to the BBA, Mr Tyrie cautioned that the government could face a possible conflict of interest between an improvement of the state of banking competition and the sale of any shares the it currently holds in bailed-out banks such as Lloyds and RBS.
Stating that since ministers run the risk of increasing the value of the government-owned shares if it restricts competition, added Tyrie. He warned that the government would have an interest in making sure they maximise their yield from any sales they attempt to make, yet they additionally have a duty to attempt to try maximising retail market competition.
Tyrie expressed a fervent hope that the government chooses to not prioritise any possible yield over the prospects of increasing competition. He concluded by stating that there should be a focus on providing a benefit for the consumer, which will benefit the economy overall, instead of seeking a more immediate financial benefit.
Most experts predict that the Vickers Banking Commission will be suggesting that, in order to facilitate an increase to competitive prospects, several High Street banks should be broken into smaller entities.