UK banks to face competition inquiry

A full competition inquiry into the market for current accounts and small business banking has been launched by the Competition and Market Authority.

After being proposed in July, the probe, will investigate into the lack of smaller competitors to the “big four” High Street names and the difficulties customers face in switching banks.

Also lending to small and medium-sized business will be looked in to.

Some of the large banks have labelled the probe as unnecessary.

In a submission to the CMA, Barclays said it felt the review was “not appropriate at this time”.

“Various developments, innovations and stimuli are changing the competitive landscape in relation to both [personal current accounts] and [small and medium enterprises] banking, and these must be given time to mature,” it added.

The competition inquiry will take 18 months to complete. The CMA also said it would review the 2002 report by its predecessor, the Competition Commission, to see if its findings were still relevant.

Source: www.bbc.co.uk/news/business

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Government To Consult On New Peer-to-Peer Lending ISA

The government is considering setting up a separate tax free individual savings account (ISA) for people who want to lend out money.

The new ISA would be for people who lend money via Peer-to-Peer (P2P) borrowing sites.

It would be in addition to the two longstanding ISAs for cash and shares.

Peer-to-peer websites, like Zopa and Rate Setter, accept money from savers which they then lend out to individuals or businesses.

Often they attract an above-average return, albeit with more risk. Lenders can, in theory, lose their money, if the borrower is unable to pay it back.

The idea has snowballed: £1.8bn has been loaned through such sites so far, and the industry believes including such lending within ISAs will boost it further.

Source: www.bbc.co.uk/business

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