Tuesday 21 May 2019

'Big Four' Northern banks face probe on pricing and competition claims

Cyril Hardiman

NORTHERN Ireland's big four banks face investigation by the UK Competition Commission over allegations that they rip off personal customers with high charges.

The Office of Fair Trading (OFT) in the UK said it would decide in five weeks whether to press ahead with a market investigation reference to the Commission, after finding evidence that the banks appeared to restrict competition on services they offer current account holders.

The OFT acted on a super-complaint against the local 'big four' - The Northern Bank, Ulster Bank, Bank of Ireland and AIB-owned First Trust - levelled by Which? and the Consumer Council for Northern Ireland.

Separately, research carried out for Alliance & Leicester suggested that the the big four banks were relying on customer apathy to get away with offering poor deals.

The research showed that over half of consumers, 52pc, had been with the same bank for more than ten years, and 44pc had not switched because they thought it was too much hassle.

The complaint put to the OFT was that the banks were engaged in greater unfair practice than their counterparts in the rest of the UK when it came to interest rates and banking charges.

OFT said that it had identified features of the personal current account (PAC) market in Northern Ireland "which appear to restrict competition and which may warrant further investigation by the Competition Commission".

It added that it had "found evidence of behaviour among the four leading providers of PAC services leading to, or demonstrating, weak competition between them."

The banks were accused of imposing charges when customers are in credit and overdrawn, which are not found in the rest of the UK.

The banks were also accused of parallel pricing behaviour, 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 charges in advance to its competitors.

The Office of Fair Trading said it now planned to consult with the banks on the case for a reference to the Competition Commission for fuller investigation of the banking market in Northern Ireland.

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