On 21 December 2007 the Competition Commission confirmed its decision to lift temporary price controls imposed in 2003 on the UK's four largest banks that serve small and medium sized enterprises (Barclays, HSBC, Lloyds TSB and RBS). Behavioural undertakings imposed on those four and on five other banks (AIB, Bank of Ireland, Clydesdale, HBOS and Northern Bank) will remain in place. The behavioural undertakings are designed to make the market more competitive by aiding switching, making prices more transparent and prohibiting the bundling of different products and services. The four SME banks must also continue to publicise changes in charges.
The Competition Commission also wants the Office of Fair Trading to reinforce the awareness and the impact of the behavioural undertakings. In particular, the Office of Fair Trading should:
- actively monitor the activities of all SME banks following the lifting of the price controls and raise awareness of any worsening of their offers;
- work with the banks to ensure that SMEs become more aware of the banks' obligations to ease the switching of accounts;
- explore with the British Bankers' Association the possibility of imposing these obligations on the banks under the Banking Code at its next review.
The notice of the Competition Commission's decision can be found at http://www.law-now.comhttp://www.law-now.com/comp211207 and further background in our LawNow email of August 2007.
The OFT will continue to monitor the banks' compliance with the remaining behavioural undertakings. Its press release can be found at http://www.oft.gov.uk/news/press/2007/181-07.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 28/12/2007.
