Customer mobility must be enhanced for the benefit of competition.
Barriers to enter the market must be diminished.
The Icelandic Competition Authority presented at a press conference today a report on “Competition in Nordic Retail Banking”. In the report the competition authorities of Iceland, Sweden, Norway, Denmark, Finland and the Faroe Islands present recommendations to governments, regulatory authorities and banks outlining how competition in the banking market could be improved for the benefit of consumers. The proposals include the following:
- Payment systems should have transparent, non-discriminatory rules. New, small and foreign enterprises must be given access to payment systems on the same terms as those who already belong to them. For this to work, regulatory reform may be necessary.
- Create clear, unambiguous roles for the owners and customers of the payment systems. Today, the largest owners of the payment systems are also their largest customers. New and clearer rules may be needed if conflicts of interest are to be avoided.
- Customers must have the opportunity to compare what different banks are offering. Government agencies and consumer organisations have an important role to play in this respect, for example by providing information via the Internet.
- Make it easier for private individuals and small businesses to switch banks.
- Create a Nordic market for Nordic customers. Harmonisation of the regulations in the Nordic banking market, and also of those in the European market, would strengthen competition, to the benefit of consumers.
In its presentation, the Icelandic Competition Authority emphasised that customer mobility is quite low in the Icelandic market. The Authority specifically addressed the notary public fee collected in relation to mortgage loans and the early repayment fees charged by banks, as barriers to switching banks. These fees, as well as the bundling of different financial services, should be reconsidered with the aim of enhancing competition and lowering the barriers to switching banks.
The Competition Authority also stated that work needs to be done to reduce barriers to entering the financial market, especially in the field of interbank payment systems and access to payment card systems.
