On 20 January 2022, the UK Financial Conduct Authority published its final report following its strategic review of retail banking business models, together with a webpage and press release.
This report follows the FCA’s progress report from June 2018.
The key points from the final report are:
– large banks have a strong position but are facing challenge from others;
– low levels of consumer engagement have historically contributed to high barriers to entry and expansion;
– digital challenges have rapidly gained a share of the personal current account and business current account markets
– competition in the mortgage market has increased (causing yields to come down)
– yields for consumer credit firms have fallen too (particularly on unarranged overdrafts);
– large banks did proportionately more micro-business lending under the government schemes than most other banks; and
– increased competition and innovation have improved outcomes for many consumers and some small businesses.
The FCA says it will be “discussing the points raised in our 2022 Final Report with firms and consumer organisations but are keen to hear from other stakeholders”. The FCA has invited written submissions by 31 March 2022.