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55/10 26 May 2010
The OFT has today launched a review of barriers to entry, expansion and exit in retail banking, to identify any obstacles facing new entrants and smaller banks seeking to expand.
The global financial crisis has led to substantial change to the banking industry. Major banks have been recapitalised by the Government and consolidation has taken place. The crisis has also led to changes in financial regulation, with more changes imminent.
The extent of any barriers to entry, expansion and exit in retail banking will affect how the market now develops. Where new entry and expansion can occur quickly and efficiently, it is more likely that banks which fail to meet their customers' needs will lose market share in favour of those that can.
The OFT is calling for evidence on the extent of any barriers affecting banking for personal customers and for Small and Medium sized Enterprises (SMEs). A paper published today sets out the anticipated scope for the review and describes the type of information being sought.
The OFT is asking interested parties to comment on:
The OFT is particularly interested in hearing from established providers, new entrants and potential new entrants to the sector, industry associations and organisations representing consumers and SME customers.
Clive Maxwell, the OFT's Senior Director for Services, said:
'The OFT is committed to encouraging competition within retail banking that benefits consumers through cheaper and better products or services.
'We have recently seen some new players enter retail banking and we want to understand whether there are any hurdles to this or to the expansion of smaller banks.'
The review covers all parts of the United Kingdom.
The call for evidence will run until 8 July 2010 and findings from the review are due to be published by the autumn of this year.
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