Press release

CMA announces programme of work on banking

The Competition and Markets Authority (CMA) today announced a short programme of work on banking.


The Competition and Markets Authority (CMA) today announced a short programme of work on banking, which will lead to a decision on whether or not to make a market investigation reference to be conducted by a CMA panel of independent members.

The CMA will build on the Office of Fair Trading’s (OFT) work in the sector, by concluding the market study into banking for small and medium sized enterprises (SMEs). It will also carry out a short update of the OFT’s 2013 review of personal current accounts.

The Financial Conduct Authority has been working closely with the OFT on the ongoing SME banking market study and will continue to do so with the CMA across this retail banking work programme.

Based on the OFT’s 2013 findings on personal current accounts and the work to date in the market study of SME banking, there appear to be important similarities between competition issues for personal current account customers and for SME customers, in particular:

  • the banking providers operating in the sector
  • how dynamics of competition operate, and
  • the way that personal and SME customers consume banking services, including levels of customer engagement with banking providers.

The CMA will consider, as part of the update of the review of personal current accounts, ongoing and planned steps taken in the sector. These include the effect of the introduction of the new seven-day Current Account Switching Service, the impact of the planned divestments by Lloyds Banking Group and by The Royal Bank of Scotland of parts of their retail banking businesses, and the forthcoming establishment of the Payment Systems Regulator.

In taking forward both the market study and the update on personal current accounts, the CMA will be informed by continuing dialogue with the sector, with representatives of SMEs and consumers, and also by work currently undertaken by others, such as the Treasury Select Committee’s inquiry into SME lending. It will also consider any other studies or inquiries that add to the evidence base for its work.

The CMA will publish the findings of its work on both personal current accounts and SME banking during Summer 2014, including its provisional decision on whether or not the statutory criteria for making a market investigation reference are met and, if they are met, whether it would be appropriate for it to exercise its discretion to make a market investigation reference. It will then consult on that provisional decision. Following that consultation, the CMA will then make a final decision on those issues during Autumn 2014.

Notes for Editors

  1. The OFT has today published an update on the analysis it has conducted to date on the SME banking market study.

  2. In April 2014, the CMA will become the UK’s lead competition and consumer body. The CMA will bring together the existing competition and certain consumer protection functions of the Office of Fair Trading and the responsibilities of the Competition Commission, as amended by the Enterprise and Regulatory Reform Act 2013. The CMA, which is a non-Ministerial government department, was established on 1 October 2013 and will be taking on responsibility for cases, market studies and other work from 1 April. See the CMA’s homepage for more information.

  3. Under section 131 of the Enterprise Act 2002, the CMA will have the power to make a market investigation reference where it has reasonable grounds for suspecting that any feature, or combination of features, of a market in the UK for goods or services prevents, restricts, or distorts competition in connection with the supply or acquisition of any goods or services in the UK or a part of the UK. Further information on the application of the reference test and the factors taken into account when the CMA exercises its discretion on reference can be found in the OFT’s guidance on market investigation references (OFT511), which is being adopted by the CMA subject to certain changes set out in the CMA guidance document, Market Studies and Market Investigations: Supplemental guidance on the CMA’s approach (CMA3).

  4. The Independent Commission on Banking recommended that the CMA should actively consider making a market investigation reference by 2015 if sufficient improvements in competition have not been made by that time. This view was reiterated by the Parliamentary Commission on Banking Standards in 2013.

  5. Enquiries should be directed to Russell Guthrie on 0207 211 8899 or Kasia Reardon on 020 7211 8901.

Photo above by Ken Teegardin on Flikr. Used under Creative Commons, photo resized.

Published 11 March 2014