Bank Charges - Competition Enquiry ?

[Amethyst]

Is this a way forward ?

Banks currently raise a significant proportion of their revenue from charges on unauthorised overdrafts which are not visible to and controllable by consumers and therefore not subject to effective competition.

Big competition studys in Northern Ireland and in South Africa have resulted in greater transparency and reduced unauthorised transaction charges.


Northern Ireland Study - Competition Commission - Inquiry - Northern Irish personal banking




South African Study - http://wikileaks.org/leak/uncensored...on-banking.pdf

and SA Competition Commission confirms cost of unauthorised transactions - Legal Beagles



ABSA's pre enquiry presentation on SA enquiry

http://www.absa.co.za/absacoza/gener...Commission.pdf


UK Competition Commission report on SME's banking.

Competition Commission report on the Supply of Banking Services - HM Treasury





http://www.competition-commission.or...man_031009.pdf

There is, however, the question of prioritization. This is less a concern for the CC, which does not choose which cases it must handle, but very much an issue for the OFT. Recession increases the pressure to concentrate on alleviation of short-term damage—stopping cartels, restricting excessive charges to consumers, indeed generally concentrating on consumer-facing sectors. There is nothing wrong with this and it serves to reassure consumers that they are not being asked to pay for suppliers’ problems

Thoughts exceedingly welcome

[natweststaffmember]

Re: Bank Charges - Competition Enquiry ?

The question with referral to the Competition Commission is whether it will do other things alongside this or whether it is a one solution strategy. Do we know what they are wanting to do?

[Amethyst]

Re: Bank Charges - Competition Enquiry ?

For reference following Joel Hill (whoever he may be from Sky News) saying

'' My understanding is the OFT will reserve the right to refer the issue of bank charges to the Competition Commission.''

I hope they do, although it does mean historical charge refunds are unlikely, it may be a possibility if you think about the JJB Sports price fixing case.

Have a look at the SA and NI reports.

[natweststaffmember]

Re: Bank Charges - Competition Enquiry ?

"reserve the right" phrase is usually used when you are doing nothing but might in the future do something rather than a specific, WE ARE going to refer the charges to the Competition Commission....it is a bit wishy washy for my liking.
For example, "I reserve the right to withdraw my comments depending on what others say". It means nothing.

[Amethyst]

Re: Bank Charges - Competition Enquiry ?

Yes I know, but it is something we have asked for if they decide against further litigation so hopefully if it is a No tmw from the OFT then it will be a yes for a competition enquiry.

[Yoda]

Re: Bank Charges - Competition Enquiry ?

Yes I know, but it is something we have asked for if they decide against further litigation so hopefully if it is a No tmw from the OFT then it will be a yes for a competition enquiry.

Looks like it is a No

[EXC]

Re: Bank Charges - Competition Enquiry ?

Yes I know, but it is something we have asked for if they decide against further litigation so hopefully if it is a No tmw from the OFT then it will be a yes for a competition enquiry.

Yes this would be relevant to a potential legal challenge (either individual or some kind of Representative Action) on historicals as if the way in which the charges were applied were found to contravene competition law it would add a lot of weight in a court of law. Though an enquiry by the Competition Commision would take a long time.

[Amethyst]

Re: Bank Charges - Competition Enquiry ?

http://www.oft.gov.uk/shared_oft/spe...olicy-pres.pdf
9th December Speech and PResentation by John Fingleton
( speech - http://www.oft.gov.uk/shared_oft/spe...9/spe-1209.pdf but look at the presentation first)

Reason One: Competition is only half the picture for a well functioning market (ii)

●In the UK this trend towards convergence is most clearly seen within market studies:

●PCA Market Study executive summary:…
A significant number of consumers do not know how much they will effectively pay in bank fees or how individual elements in the charging structure will be implemented, either before or after they are incurred…

…this means banks have less incentive to provide better offers on insufficient funds and interests. Without better offers from banks, however, consumers have little incentive to switch.”...

…The OFT believes that the market may be stuck in an equilibrium that does not work well for many consumers.





Reason Three: Consumer instrument may be the best instrument for the job (iii)

●Intersection of competition and consumer policy potentially seen in Article 82

Prioritisation:-“Conduct which is directly exploitative of consumers, for example charging excessively high prices or certain behaviour that undermines the efforts to achieve an integrated internal market, is also liable to infringe Article 82.

The Commission may decide to intervene in relation to such conduct, in particular where the protection of consumersand the good functioning of the internal market cannot otherwise be adequately ensured.”EC Guidelines on 82 Prioritisation para 7.

●Use of 82 as a way of protecting consumer and enforcing consumer policy or vice versa?