OFT poised to intervene amid bank duopoly claims

THE Office of Fair Trading has told the Scottish Parliament that it will consider further intervention in Scotland's banking market amid claims that Royal Bank of Scotland and Lloyds Banking Group are operating a "duopoly" in some sectors.

The OFT has written to the parliament's economy, energy and tourism committee after MSPs raised concerns about the level of competition in Scotland's personal accounts, mortgages and small business banking markets. Earlier this year the committee, convened by Iain Smith, Lib Dem member for North East Fife, published a report on the future of Scottish banking in which it pressed for an urgent OFT inquiry.

In its response to the committee, revealed today, the OFT has committed to monitor developments over the next two years and will consider further intervention, including recommending legislation, if the sale of RBS and Lloyds assets, as required by the European Commission, does not increase competition.

Commenting on the OFT's response, Smith said: "Our inquiry raised a number of concerns, one of the major ones being the difficulties faced by small and medium sized business and consumers in obtaining finance from banks."

The Federation of Small Businesses in Scotland has accused the two main Scottish banks of operating a "duopoly" in the SME lending market.