In may 2006 the European Competition Regulators finished the study they started in May 2004 on competition issues in retail banking. To appreciate the report we should first look at what ECA is.
ECA is a united work force of the competition authorities of the EEA (European Economic Area) and EFTA (European Free Trade Area), which was established in Amsterdam in 2001. ECA aims to be an informal and pragmatic organisation which seeks to find ways, by means of discussion, in which competition policy and regulation can best be implemented within Europe—so-called ‘best practices’. ECA aims to improve cooperation between European competition authorities and to stimulate convergence of regulations and policy through discussion. In addition, its members jointly search for solutions to complex shared problems. Members meet at least once a year.
In sum: ECA is a new European institution. Whereas central banks, supervisors, governments have all kinds of European or worldwide cooperation organisations, the competition authorities did not have one. And, as a rule, in the first years of the existence of such institutions, all involved need to get going and warm up. Often one sees shallow reports in the first years, to become better over time, as the
So now the ECA published its first report on competition issues in retail banking. Although the title suggest a broad overview of retail banking (including provision of mortgages, loans, savings etc) it is effectively a study on competition issues in retail payments. And as a first report of a young institutions, this is quite a decent report.
Of course some analytical flaws/inconsistencies can be pointed at (especially when the mantra on bank concentration-competition is repeated) but as such it is quite a good effort. Essentially it provides a nice overview as well as the following recommendations:
1-improve customer mobility,
2-improve access & governance of payment systems by separating scheme rules from processing,
3-involve local competition authorities more in SEPA, as the competition effects of SEPA are too much overlooked right now.
There is not bound to be too much follow up for this report in the Netherlands. We have:
1- a fully operational switchting service for retail payments
2- separated schemes/processing (Currence/Interpay)
3- an competition authority: both the Chair and Secretary of this report are Dutch (which may by the way explain the nature of the recommendations).