OFT investigates Barclays and RBS for loan fixing

03 June 2008 / by Rachael Stiles
The Office of Fair Trading has launched an investigation into RBS and Barclays, raiding their offices in search of evidence suggesting the two banks were involved in anti-competitive conduct.

Barclays and RBS are being investigated following allegations that the banks' sales staff have been collaborating to fix prices in the loan market for those offered to professional services firms, such as accountants and lawyers.

As part of its hard-line approach to anti-competitive behaviour in the market, on May 21, the regulator seized computer records and emails from the banks to help it assess whether or not the law has been broken.

Barclays has said that it requested the investigation after being approached by outside sources "in a manner which we regarded as inappropriate," the Financial Times reported.

Barclays also confirmed that it has applied for leniency on the grounds that it had acted as a whistleblower and should therefore be protected from having to pay huge fines.

The OFT has taken a more aggressive approach to tackling price-fixing in recent years, handing out more severe fines and targeting executives with the threat of a five year jail sentence.

Few allegations are pursued in such a way by the regulators, but this probe into uncompetitive business comes amid other high profile investigations into allegations of price-fixing by supermarkets, tobacco groups and consumer companies.

A full scale investigation into the matter is expected to add to the pressure which bank staff are already under as they struggle to drive up sales during a global credit crisis.

Meanwhile, in a move which suggests further instability, RBS is in talks with Tesco to sell its 50 per cent share of Tesco Personal Finance in a £1billion deal. Talks are ongoing to end the partnership which was created when the bank and the UK's largest supermarket chain set up the financial services business 10 years ago.

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