Report highlights ‘weak competition’ between NI banks

A new report has said there is evidence of "weak competition" between the four big local banks in Northern Ireland.

The report, by the Office of Fair Trading, which follows a "super-complaint" made by consumer association Which? and the Consumer Council on bank charges, found that features of the personal banking industry in Northern Ireland "appear to restrict competition".

Among the main points of the report, the OFT found local banks:

• impose a number of charges when customers are in credit and overdrawn which are not found in the rest of the UK.
• have stated that their charges are not directly cost-derived.
• there is evidence of parallel pricing behaviour among them, and of price leadership (where one firm in a market sets a price which others follow) and possible price signalling (where the price leader reveals its price changes in advance to its competitors).
• do not actively compete for customers switching accounts.

Commenting on the report, Sir John Vickers, OFT Chairman, said: “Our analysis of the super-complaint has identified questions about the effectiveness of competition in the provision of personal current account services in Northern Ireland. We will now consult with the banks that would be affected on the case for a reference to the CC for fuller investigation of the market."

The consultation will last for five weeks and closes on Friday 18 March 2005.

(MB/SP)