Report on the Competition in the Nordic Retail Banking


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 meeting today a report on “Competition in the Nordic Retail Banking”.  In the report the competition authorities of Iceland, Sweden, Norway, Denmark, Finland, and the Faeroe Islands present recommendations to governments, regulatory authorities and banks outlining how competition in the banking market might be improved, to 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 owners and customers of the payments 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 part to play in this respect, e.g. 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 placed emphasis on the fact that customer mobility is quite low in the Icelandic market.  The Authority addressed specificly the notary public fee collected in relation to mortage loans and early payment fees collected by banks, as barriers to switch banks.  These fees as well as the bundling of different financial services should be reconsidered with the aim to enhance competition and lower the barriers to switch banks.

The Competition Authority also stated that there is work to be done in diminishing barriers to enter the financial market, especially in the field of interbank payment systems and access to payment card systems.
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