Businesses join calls for banking competition inquiry

THE Federation of Small Businesses has added its voice to calls for a Scotland-specific inquiry into competition in the banking market.

Speaking ahead of a Scottish Parliament debate on banking on Wednesday, Andy Willox, policy convener for the FSB in Scotland, warned there is a "specific problem" north of the Border which will only be resolved through a full investigation by the Office of Fair Trading (OFT).

The lobby group has long bemoaned the lack of competition in the small business market, where it claims Royal Bank of Scotland and Lloyds Banking Group operate a "duopoly". It estimates that the two banks lay claim to 75 per cent of the market between them.

The Scottish Parliament's economy, energy and tourism committee called for the OFT to investigate the issue in March when it published a report into the Scottish banking sector. The conclusions of that report are due to be debated at Holyrood this week.

Willox said: "Better competition between a greater number of players is crucial and the committee was absolutely right to call on the OFT to institute a formal investigation into competition in the Scottish banking market."

In a letter to the committee last month, the OFT stressed that it will this year hold an inquiry into barriers to entry to Britain's banking market. It has pledged that the investigation will consider "particular problems in parts of the UK, including Scotland".

However, some parties, including the FSB, do not feel this goes far enough. Willox added: "Nothing short of a full investigation into competition in Scotland, as urged by the committee, will do."