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Shares in UK 100 banks are doing well this morning (up 1-3%) as investors breathe a collective sigh of relief that results from a long-awaited 19-month investigation by the CMA competition watchdog weren’t more drastic. A requirement to cap unauthorised overdraft fees and join a price-comparison website to give customers better service and facilitate switching is being considered pretty much a let off by traders who had been on alert for some more radical and sweeping reforms.
While the measures may well save customers an estimated £1bn over 5 years, critics say the provisional recommendations don’t go anywhere near far enough to overhaul the personal and business banking market. If the aim was to promote competition, today’s update doesn’t really give the new challenger banks much more chance to spice things up and put an end to what has been a rather comfortable high street oligopoly for far too long (75-85% market share).
Successful lobbying has likely proved its worth once more, and a golden opportunity missed to deliver a once in a generation shake-up in favour of the consumer. No surprise so see the shares of smaller challenger banks failing to keep up. Better luck next time.
Mike van Dulken, Head of Research, 17 May
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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