The OFT has provided an update on the work it has undertaken to date on its market study on competition in banking services for small and medium-sized businesses (SMEs). So far, the OFT has found that competition is ineffective, with the following exacerbating the situation:
- high concentration;
- barriers to entry and expansion;
- perceived barriers to switching;
- difficulties in comparability;
- low customer engagement;
- low switching levels;
- the issue of granting waivers of security;
- deeds of priority; and
- compliance with certain aspects of the SME undertakings.
The OFT will now pass the final decision onto the Competition and Markets Authority to conclude the market study and take any further decisions that may be necessary as a result.