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Comment: New regulator doesn’t need to fight with banks

George Kerevan. Picture: Ian Rutherford

George Kerevan. Picture: Ian Rutherford

  • by GEORGE KEREVAN
 

BEFORE we get too excited about the decision of the new Competition & Markets Authority (CMA) to consider an all-out probe of the competitiveness of the high street banks, remember we’ve been here before.

There was an inquiry by the old Competition Commission into bank services to small businesses, in 2002. In 2008, the now defunct Office of Fair Trading had a look at the market for current accounts.

Where are we after all this huffing and puffing? The big four – Barclays, HSBC, Lloyds and RBS – still control three quarters of the current account market and 80 per cent of small business lending.

Yet a quick look at the independent Which? survey of customer satisfaction regarding current accounts shows Lloyds scoring only 57 per cent, Barclays and HSBC 56 per cent, and RBS second to bottom with 51 per cent. First Direct comes top with a customer satisfaction score of 85 per cent and no fewer than 11 banks getting higher marks than the big four.

CMA only came into full operation in April, so one can be slightly suspicious it is looking for a way of signalling its presence: what better way than to probe the banks? Or it may be trying to get its retaliation in early – Labour’s Ed Miliband has already touted such a market investigation should Labour win the 2015 general election.

If a full-scale CMA investigation does go ahead, expect bank shares take a hit – RBS was already suffering yesterday.

CMA’s chief executive is Oxford-educated Alex Chisholm, who worked six years on the media beat at the old Office of Fair Trading before joining … er, Pearson publishing. One view is that Chisholm has too much on his plate to be effective. Last month Ofgem, the energy watchdog, referred the entire power industry to the CMA.

I’m all for strengthening competition in retail banking but I don’t think it will be achieved by more grandstanding or Ed Balls’ idea of an arbitrary cap on individual market shares.

The reason why only 3 per cent of consumers switch personal accounts between banks is rooted in the opaqueness of bank charges. This in turn reflects the British obsession with “one size” monthly current account fees. Chisholm should push the banks away from flat fees and towards paying for individual services, including advice. Then the customers can see what they are paying for.

Fox hasn’t given up on pursuit of Time Warner

Don’t expert Rupert Murdoch to abandon his £47 billion bid (via Fox) to acquire the televsion production side of Time Warner.

What’s driving him is the consolidation of US pay television distributors. Comcast is already acquiring Time Warner’s cable interests while AT&T is buying satellite broadcaster DirecTV. That will give the distributors market power over producers like Fox.

But if Murdoch nabs Time Warner, the resultant giant movie and TV programme maker will be in an advantageous position to deal with Comcast, or uppity new online distributors such as Netflix.

How high will Murdoch bid? Fox is cash rich. It will be £6bn richer if BSkyB completes the planned buyout of Fox’s Italian and German pay-TV businesses, to create Sky Europe. Even at 83, Murdoch is still prepared to bet the farm.

If you are hoping to short Fox and buy Time Warner, you are too late. The markets are betting on the Dirty Digger to offer £55bn.

 

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