OFT chief threatens UK banks of break up to secure consumer interests
17 February 2012
The UK's banks have been warned of a forced break-up unless they introduced customer-service reforms. The threat came in a speech delivered by the head of the Office of Fair Trading to bankers aimed at increasing competition.
According to John Fingleton, he could refer the entire banking industry to the Competition Commission as part of a radical approach to secure consumers a better deal.
He added banking was at a "turning point" with the emergence of new banks such as Virgin Money, Metro Bank and Tesco, but that was not enough.
Highlighting the issue of bank account switching, initiated last year by the Independent Commission on Banking (ICB), he said banks would also have to provide "seamless redirection" of direct debits and credits from old accounts to new ones for more than a year at no cost. The ICB had made several recommendations designed to make it easier for people to switch banks. One of the proposals was that people and businesses wanting to change banks should be able to switch accounts within seven days.
He added, customers also needed the right prompts to exercise their choice of provider.
He added, in banking markets, consumers frequently faced difficulties in understanding the true cost of running their account and comparing deals from alternative providers.