North banks face price-fix probe

EVIDENCE of price-fixing by AIB, Bank of Ireland, Ulster Bank and Northern Bank in the North has been found by the British Office of Fair Trade (OFT).

An OFT investigation into personal current bank accounts (PCAs) market in the North has resulted in the office commencing a five-week consultation process before it decides on whether to make a market investigation reference to the Competition Commission (CC).

The initial investigation was sparked by a “super complaint” from Which? magazine that consumers are being “ripped off” by the North’s four largest banks.

*The OFT investigation found the four main banks with 77% of the market:

*Impose charges when customers are in credit and overdrawn. These are not found elsewhere in Britain.

*Say their charges are not directly cost-derived.

*Must explain evidence of parallel pricing behaviour among them, price leadership with one firm setting a price others follow.

*Engage in possible price signalling.

*Are asked why they do not actively compete for customers switching accounts.

OFT chairman John Vickers said: “Our analysis of the super-complaint has identified questions about the effectiveness of competition in the provision of personal current account services in Northern Ireland. We will now consult with the banks that would be affected on the case for a reference to the CC for fuller investigation of the market.”

A statement from AIB’s Northern subsidiary First Trust said that the bank has co-operated fully with the OFT throughout its three-month review and will now enter into a period of further consultation in order to address the questions raised but not yet resolved by the OFT.

Bank of Ireland welcomed the chance to take part in OFT consultation and the OFT’s views that a lack of price transparency is not an issue in the market.

Ulster Bank, owned by Royal Bank of Scotland, said it would like to highlight that over 80% of its personal current account customers enjoy free banking.

“Furthermore, an estimated 19 out of 20 of its personal current account customers enjoy a deal that is either as good as, or better than, their equivalents in Great Britain,” the bank added.

Northern Bank, bought by Denmark’s Danske Bank in December, said it takes the OFT report very seriously adding that on Monday it made a significant step towards addressing customer concerns. Then the bank launched Current Account Plus that charges no fees for day-to-day banking.