Lloyds Bank bluntly rebuffs CMA`s banking sector taskforce

The bank claimed that the surveys and focus groups being used to assess planned reforms to the industry “do not provide robust evidence for the CMA’s investigation”, telegraph.co.uk reports.

“Lloyds would be very concerned if the CMA were to use the wholly unreliable findings from these pieces to draw any conclusions,” the bank said.

“The qualitative research is profoundly unsuitable for use as evidence to support any conclusion on the CMA’s proposed remedies.

“This is because focus groups can easily be biased, and some areas of customer insight simply cannot be reliably established with these techniques.”, the source cites.

The CMA proposed a series of measures to improve competition in banking, including the development of a comparison website for small business bank accounts, and an improved comparison service for personal current accounts, and further advertising for the seven-day account switching service.

The aim is to improve competition, value and service in a sector where few customers move between providers. However consumer groups, MPs and banks – particularly the small banks that have most to gain from a radical shake-up of the market – have said the plans are too limited.

Final proposals were expected to be published in May, but the CMA has pushed that back to August to allow it to carry out more work investigating different solutions. Part of that work includes commissioning surveys and focus groups. But Lloyds said the surveys should be used to help generate ideas, rather than to judge proposals that have already been developed.

“The ideas generated in the creative process must then be tested using robust behavioural research techniques such as carefully designed randomised control field trials or appropriate laboratory experiments,” the bank said, the source cites.

It also said the methodology in the surveys lacks rigour, noting that the questions were often given as part of a much wider survey, influencing the results, and that the questions were often hypothetical and unrelated from real decisions by customers. The CMA declined to respond to Lloyds specific claims and demands.

Meanwhile a group of challenger banks has urged the CMA to push the Treasury to review the corporation tax surcharge on banks which came into force in January 2016, adding an extra 8pc tax on top of what banks already pay.

The group of 10 bosses of smaller lenders argues that the new tax hurts their ability to retain profits as capital, which they can use to increase lending and grow more quickly, thus undermining competition in the sector.

“The CMA should go beyond its current draft remedies and make concrete proposals addressing the core underlying impediments to competition around capital, access to funding, access to payment systems and proportionate regulation,” said the bankers, including Phillip Monks of Aldermore Bank, Craig Donaldson from Metro Bank, David McCreadie from Tesco Bank, Shawbrook’s Steve Pateman and Secure Trust Bank’s Paul Lynam, the source cites.

The CMA should also “urge HM Treasury to establish and follow a clear timeframe for completing a review of the competition impacts of the tax system,” they said.