The Independent Commission on Banking (IBC) released its report on 12 September 2011. The main focus of the report is on the safety of the consumer and taxpayer post-crisis but it also contains significant recommendations on competition in the banking sector. The IBC report points to the long-standing competition issues in UK Retail banking which were further impaired by the financial crisis. The retail market is highly concentrated. The largest four banks currently hold around 77 per cent of personal accounts and 85 per cent of accounts of small and medium-sized enterprises. The IBC’s recommendations to the Government include:

  • Structural separation to ring-fence retail banking activities from wholesale and investment banking activities;
  • Structural changes in the market including the divestiture of Lloyds to create a new effective competitor;
  • Measures to improves switching for personal and business current accounts; and
  • A strengthened mandate for the Financial Conduct Authority to undertake pro-competitive regulation in the market to tackle issues such as reduction in barriers to entry.

Related item:

Independent Commission on Banking report

To access a copy of the report click here