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News Article

Could the banking sector face a 'break up'?

Published 17 February 2012 by

The head of the Office of Fair Trading (OFT) has warned that large banks could face being 'broken up' into smaller ones unless they show a 'step change' in competition.

In a speech given to bankers, John Fingleton said that banks must give the 'right prompts' to help bank account customers decide whether or not they should change their account provider.

The issue of switching bank accounts was raised last year by the Independent Commission on Banking (ICB), which proposed several recommendations designed to make switching bank accounts easier for customers.

Mr Fingleton said: "It is not enough to make it easy to switch. Customers also need the right prompts to exercise their choice of provider.

"In banking markets, consumers frequently face difficulties in understanding the true cost of running their account and comparing deals from alternative providers."

He also commented that the emergence of new banks represented a 'turning point' in the banking sector, and that a 'radical' approach would have to be taken if banks don't change to make switching bank accounts more straightforward.

A spokesperson for thinkmoney commented: "Anyone who is looking to open a bank account that is upfront about its fees and charges could consider the thinkmoney Personal Account. It costs a monthly fee of just £14.50 for a single account - but this is all you'll ever pay, as there are no hidden fees or charges for going overdrawn or for rejected payments."