Business Opinion: The decision of the UK Competition Commission to investigate the big four retail banks in Northern Ireland is not without ramifications south of the Border.

Firstly, if nothing else, it serves to remind us that we get a very bad deal from our banks. The main conclusions of the UK Office of Fair Trading (OFT) study that led to the commission's investigations are that a number of factors are restricting competition in the banking market in the North. The OFT found that:

There is a high level of concentration in the market.

An extensive branch network appears to be a barrier to entry and expansion.

There is clear evidence of parallel pricing among the big four, and Northern Bank appears to act as price leader.

The big four do not actively compete on price.

The big four do not actively compete for switching customers.

There is a high level of consumer inertia and the level of customer switching is too low.

Sound familiar? Well so it should. Compare it with the findings of the study into the banking market in the Republic that was commissioned by the Competition Authority and forms the basis of its investigation of the banks. It found:

The market is dominated by two large banks that account for over 70 per cent of sales of banking services.

Customers are "locked in" and it is difficult for them to change banks. This means that customers have little choice, and that their banks don't compete very intensely for their business;

The sector is over-regulated in ways that restrict competition. New banks can't easily enter the Irish market, which protects the existing banks from stronger competition and deprives customers of the choice and extra value that new entrants bring.

Small businesses are not getting the benefit of lower interest rates. Between January 2001 and January 2004 failure to pass on cuts in interest rates is estimated to have cost small business in Ireland approximately €255 million.

Given that the same four banks - AIB/First Trust, Bank of Ireland, Ulster Bank and Northern Bank/National Irish Bank - dominate the two markets, it should not really come as a surprise that the same sort of anti-competitive practices are promulgated on both sides of the Border. But that does not make them any more palatable either.

The second issue highlighted by the UK investigation is the weakness of the consumer lobby here. The Competition Commission's investigation was triggered by a referral from the Office of Fair Trading, which carried out its own study on foot of what is termed a "super complaint" from the UK consumer lobby group Which? and the General Consumer Council for Northern Ireland.

Under UK consumer legislation a number of designated consumer bodies are allowed make super complaints about features of a market in the United Kingdom for goods or services that "is or appears to be significantly harming the interests of consumers". The body must back up its complaint with some analysis and the OFT then has 90 days to decide whether to investigate.

There is no comparable route for consumers to raise an issue in such a fashion in the Republic for many reasons. But even if there was, we lack a body with the clout of Which? that could actually take advantage of it.

This, hopefully, may be about to change following the decision to establish the National Consumer Agency, which follows on from the report of the Consumer Strategy Group. It has a mandate to advocate on behalf of consumers, but there still is no clear route - such as super complaints - that will allow it raise issues with the relevant authorities.

The final issue raised by the Northern Irish investigation is the difference between the powers of the Competition Commission and its counterpart here, the Competition Authority.

If the commission concludes at the end of its investigation that the banks have a case to answer, then it has the power to impose remedies such as making the banks pay interest on accounts.

Following a similar investigation into business banking in the UK the commission indicated that it was minded to impose remedies. The threat of this alone proved sufficient for the high street banks to unilaterally start offering interest to business customers.

The Competition Authority has no such powers. Once its investigation into the banks is complete - probably in the autumn - it will make its recommendations to the Government and that will be the end of its role.

While there are some signs - such as the introduction of a switching code - that the banks will be proactive rather than wait for the Government to take action, there is no guarantee that they will.

Equally, there is no guarantee that the Government will take any action given the vested interests at play. In fact there is no guarantee that anything will change at all. Any talk of ending the special levy on bank profits seems a little premature in this context.