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OFT to investigate banks

OFT to investigate banks

Category: Banking

Updated: 16/07/2012
First Published: 16/07/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Office of Fair Trading (OFT) has announced that it will be launching a fresh investigation into the current account market.

The watchdog has said that it will be assessing whether the initiatives agreed by the UK's high street banks following its 2008 investigation are being met.

Areas it will be looking into include:

  • Customer service;
  • Whether banks have been successful at improving the current account switching process;
  • Increased transparency when it comes to personal current account charges; and
  • Whether the banks are allowing customers to manage their accounts more effectively.

The review forms part of a wider initiative designed to achieve a more competitive and customer-focused banking sector.

If the OFT finds evidence of a lack of competition in the current account market, it will refer banks to the Competition Commission where they will undergo further investigation.

"We committed to keeping the personal current account market under scrutiny following our 2008 study," said OFT director Claire Hart.

"Through this review we want to understand what progress banks have made in providing customers with better information about account charges, greater control over their accounts and easier account switching facilities."

The watchdog Consumer Focus welcomed the investigation, saying the low levels of switching in financial services is a sign that the sector is not as competitive as it should be.

"It speaks volumes that nearly three quarters of customers never switch their current account, often feeling there is little point as the big banks and the products they offer are all the same," said Adam Scorer, Consumer Focus's director of external affairs.

"There is always a risk of banks becoming complacent if customers don't vote with their feet. Promoting switching and tackling the lack of transparency over fees and charges would be a start to kick start competition and force providers to put a lot more into customer service than they currently do."

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