Proceso unificado racional

Both companies have well-known brands that already have wider experience in financial services markets and if they were to enter the market, it is possible that these brands may generate significant interest among consumers.

4.53 There are two significant developments due to occur in 2013. Both Lloyds Banking Group and RBS are required to divest parts of their businesses as a condition for the re-capitalisation they received during the financial crisis. These requirements were imposed by the European Commission (EC) pursuant to its State Aid powers. In both cases the divestments must be made to a business with a current account market share of no more than 14 per cent in the UK.

4.54 For Lloyds Banking Group, its divestment represents around 600 branches and a share of 4.6 per cent in the PCA market in the UK⁷⁵

71 See

and it is expected by the EC to be completed by 30 November 2013. Lloyds

http://bank.marksandspencer.com for details.

72 Figure 54, Packaged and Current Accounts – UK, Mintel, June 2012

73 See Tesco Annual Report 2012, p21

www.tescoplc.com/files/reports/ar2012/files/pdf/tesco_annual_report_2012.pdf for details.

74 See https://uk.virginmoney.com/virgin/current-account/current-account-interest-form.jsp for details.

75 State aid No N 428/2009 http://ec.europa.eu/eu_law/state_aids/comp-2009/n428-09.pdf

Banking Group has agreed non-binding heads of terms with the Co-Operative Group. Alongside divesting the TSB and Cheltenham &

Gloucester brands, and a balance sheet of £24 billion, the accounts of 3.1 million PCA customers will be transferred, as a result of which the Co-Operative Group may be expected to have a PCA market share of around seven per cent.⁷⁶

4.55 The RBS divestment represents 316 branches and 1.7 million of the group’s retail customers, equivalent to around two per cent of the UK retail banking market.

77 The EC expected the RBS divestment to be completed by 31 December 2013. RBS had planned to sell these assets to Santander but this deal recently fell through.⁷⁸ RBS has recommenced a process for the disposal of this business.⁷⁹

4.56 It is not possible at this time to predict the impact of these two divestments. They are both substantial in size and should give the acquirer sufficient scale to pose a more significant competitive threat.

While the ICB considered that the market share requirement of the Lloyds Banking Group divestment was sufficient to lead to a viable entity, it also felt the benefits to competition in the UK would be

maximised if the entity resulting from the divestiture had a PCA market share of at least six per cent. The ICB also stressed the importance of the resulting entity’s funding position.⁸⁰

76 See

www.lloydsbankinggroup.com/media1/press_releases/2012_press_releases_lbg/1907_Verde.asp for details.

77 State aid No N 422/2009 and N621/2009 http://ec.europa.eu/eu_law/state_aids/comp-2009/n621-09.pdf

78 See www.rbs.com/news/2012/10/statement-on-disposal-of-uk-branch-based-business.html for details.

79 See www.rbs.com/news/2012/10/statement-on-disposal-of-uk-branch-based-business.html for details.

80 The Lloyds Banking Group press release states that following the divestment the Co-operative is expected to approach seven per cent of the PCA market. Furthermore, the divested entity is said to have a balance of sheet of around £24 billion with fully matched assets and liabilities.

4.57 It is also not clear to what extent consumers will be willing to have their PCAs switched through this process to a provider they have not chosen.

We will need to wait until the divestments are complete, and consumers' responses are known, to assess the impact of these changes on the structure of the PCA market.

4.58 The new switching service may also impact on market structure in the longer term, if an improved switching process leads to an increased willingness to switch among consumers. The new switching service is discussed in more detail in Chapter 6.

5 UNARRANGED OVERDRAFTS

5.1 In a market that worked well for consumers, it would be expected that consumers would be able to choose how much of a product or service to buy and when to buy it. The 2008 market study found that complexity in the way that unarranged overdraft charges (UOCs) were implemented made it hard for consumers to understand, predict and control when they would be incurred. Consequently, UOCs were not subject to competition and PCA providers had been able to increase them to the point where they constituted around a third of their PCA revenues.

5.2 This chapter outlines the OFT’s work to date in relation to unarranged overdraft charges. The OFT, following its market study and test case on Unfair Terms in Consumer Contract Regulations (UTCCRs), agreed a number of initiatives with the PCA providers to improve the market. This chapter surveys the implementation and impact of these initiatives, as well as those announced in the Government's Consumer Credit and Personal Insolvency Review. It also sets out how charges for both

unarranged and arranged overdrafts, and the amount of revenue the PCA providers earn from them, have changed since 2007.

5.3 The key findings from this review are that charges for unarranged

overdrafts have declined significantly since the OFT's PCA market study and UTCCR investigation, although charges for arranged overdrafts have increased since 2007 and charging structures remain complex. In

addition, while most PCA providers offer increased control through text alerts and mobile applications, most do not offer consumers the ability to opt-out of unarranged overdraft facilities across the full range of PCAs that they offer and, where it is offered, take-up is low.