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OFT to investigate how tough it is to get ahead in retail banking

The Office of Fair Trading is to investigate barriers faced by new entrants or those wanting to enter the retail banking sector, and for smaller banks looking to expand.

The OFT has published a paper calling for evidence on the barriers to entering, expanding and leaving the retail banking market and how these might affect customers.

It is looking for evidence on questions such as how easy it is to obtain authorisation from the Finan- cial Services Authority, the constraints of regulatory capital and liquidity requirements and specific difficulties in developing branch networks.

The regulator also wants to find out how easy it is for banks to wind up their operations.

It says it would like to hear from established providers, new entrants and potential entrants, as well as organisations representing consumers and small and medium-sized enterprises.

Clive Maxwell, senior director for services at the OFT, says: “We are committed to encouraging competition in the retail banking sector that benefits consumers through the provision of cheaper and better products or services.

“We have recently seen some new players enter the retail banking space and would like to better understand what the hurdles are to this, or the expansion of smaller players.”

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