UK Retail Banking Investigation Fails to Meet Challenger Banks’ Expectations

Dec 07, 2015

CPI Europe Column edited by Anna Tzanaki (Competition Policy International) & Juan Delgado (Global Economics Group) presents:

UK Retail Banking Investigation Fails to Meet Challenger Banks’ Expectations by Alan Davis & Matt Evans (Jones Day, London)

Intro by Juan Delgado (Global Economics Group)

“Free-if-in-credit” (“FIIC”) banking was at the core of the recent UK CMA market investigation on retail banking. FIIC is becoming increasingly common across Europe and, although it could be itself a sign of fierce competition, it can also act as a barrier to entry to new players. The CMA opted for not regulating FIIC. Instead, they focussed their proposals in reducing consumers’ switching costs as a way to promote competition. Alan Davis and Matt Evans analyse the main conclusions of the investigation and highlight the soft approach of the CMA to retail banking competition, in contrast to previous more radical interventions in other industries.

New market entrants and challenger banks have criticized the UK Competition and Markets Authority’s (“CMA”) recent market investigation of competition in retail banking for not addressing the core issues and failing to improve the outcome for consumers. After an investigation lasting 18 months, the CMA provisionally concluded that, although there is a lack of effective competition in the market, it is not necessary to impose structural remedies, such as breaking up the largest retail banks