Banking review 'brought forward'

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A review of competition in the small business banking sector has been launched following calls for an inquiry by the Commission on Banking Standards.

The Office of Fair Trading (OFT) said it was "bringing forward" its planned study of small and medium sized enterprises (SMEs), which will cover England, Northern Ireland, Scotland and Wales.


It is seeking views on a range of issues, such as whether small business lending is being held back by a lack of competition between banks, if services provided are adequate and offer good value and if certain types of companies face particular difficulties, such as start-ups and small financial firms.

The commission's report recommended a market study of SME banking amid concerns that a lack of competition was leaving firms with little or no choice and as lending levels to small businesses remain woefully low.
Bank of England data recently revealed that loans to SMEs fell by £700 million in April despite its flagship Funding for Lending scheme.

Lending to businesses overall plunged by £1.2 billion.

OFT chief executive Clive Maxwell said: "A competitive banking system and access to finance is vital to businesses and to economic growth.

'Our review of SME banking is part of an ongoing planned programme of work in this area to allow the Competition and Markets Authority (CMA) to decide whether or not to make a market investigation reference by 2015."

The OFT said it proposed a review of the SME banking sector last July.

The CMA is set to be formally launched next April as a single watchdog to replace the OFT and the Competition Commission.

© 2013 Press Association

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