UK CMA final decision of the SME Banking Undertakings 2002

The UK Competition and Markets Authority (CMA) has published its final decision following a review of the SME Banking (Behavioural) Undertakings 2002, specifically the limitation on bundling provisions (LOBP). These provisions prohibited bound banks from requiring SMEs to open or maintain a business current account as a condition for obtaining a business loan or deposit account. Following its review, the CMA concluded that, due to significant changes in market conditions since 2002, including increased competition, reduced barriers to entry, technological developments, greater customer willingness to switch providers and the introduction of the consumer duty, the LOBP are no longer appropriate and should be released. The CMA found that banks previously bound by these undertakings no longer hold sufficient market power in SME loans and deposit accounts to justify retaining these restrictions, and that competitive constraints would prevent adverse effects on competition if such tying practices were reintroduced. The LOBP were the last remaining provisions of the SME Banking (Behavioural) Undertakings 2002 meaning that these have now been released in their entirety.

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