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OFT Initiates UK Retail Banking Industry Barriers Review

Office of Fair Trading (OFT), the UK's consumer and competition authority, has 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 in the UK.

The OFT has called for evidence on the extent of any barriers affecting banking for personal customers and for small and medium sized enterprises (SMEs), as part of its efforts to establish long-term competitiveness in the retail banking industry.

The OFT has invited interested parties to submit their views on: regulatory requirements including obtaining authorization from the FSA and capital and liquidity requirements; essential inputs such as access to payment systems and availability of credit risk information; barriers to achieving scale such as developing branch networks and customer inertia; and barriers to exit and aspects of the operation of the Special Resolution Regime.

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.

The findings will form part of the broader inquiry into the retail banking industry that will be used by the government’s banking commission.

Clive Maxwell, senior director for services at OFT, 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.”