THE beleaguered banking sector has won a reprieve from plans for a full-blown competition inquiry into the current account market.
The Office of Fair Trading has decided not to refer the industry to the Competition Commission for the time being, highlighting new rules being implemented in September to make it easier for customers to switch accounts, and the branch sales by Lloyds and RBS intended to create competitor banks.
In a 15-page report, the OFT concluded "the changes and the resulting flux in the market and uncertainty over their effects, mean it would be difficult at this time for the commission to reach robust judgments about how competition is likely to evolve in the short term, and how to design appropriate, effective and proportionate remedies to any adverse effects on competition".
Lloyds, RBS, Barclays and HSBC still control more than 70% of the current account market worth £9 billion annually, and levels of switching are still low compared with other financial products.
Research published yesterday by First Direct showed 44% of UK adults have never switched their current account and only 4% will definitely change provider in the next two years.
The OFT said it still had concerns about the market and would consider again whether there were grounds for a competition inquiry in 2015 at the latest. However, it noted there had been a significant reduction in overdraft charges since a previous study in 2008.
Richard Lloyd, executive director of consumer group Which?, said: "It's disappointing current account providers have been let off the hook when the Office of Fair Trading found such damning evidence of people being let down by the banks."
Competition received a boost this week when the Post Office launched three new current accounts backed by Bank of Ireland, though the full roll-out will not start until next year.
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