12
incentives (see Appendix A). It is also limited to SMEs under £2 million
turnover.
(b) The analysis is based on a small number of profiles and may not be fully
reflective of all SMEs. As noted by RBS in its response to the UIS, SMEs
are a diverse customer group and designing representative user profiles
is a particularly difficult challenge.
The analysis is also based on the
assumption that SMEs are on the lowest priced available tariff (see
paragraph 19). It also does not take account of any negotiation of prices
(though this is less prevalent for SMEs under £2 million turnover).
(c) Differences in prices may reflect quality of service differences. RBS said
that the relationship and service components were typically more valued
by SME customers and the particular service given to SMEs was tailored
to the particular needs of the business, which will be determined by its
size, the sector in which it is active and the nature of the SME
business.
Similarly, Barclays said that any pricing analysis needed to
also take into account differences in quality of service.
As noted in the
UIS, we are looking separately at data on quality of service, and
differences in quality of service will need to be borne in mind when
considering any price differences. We do not consider that the value to
consumers of quality of service differences can be calculated with
sufficient accuracy to calculate prices adjusted for quality of service.
Therefore, the results of pricing and quality of service comparisons will
need to be considered together.
29. Any differences in average prices between providers may have a number of
explanations, including growth strategy (an expanding bank may have lower
prices because it has more active and fewer inactive customers) and balance
sheet strategy.
Personal current accounts (PCAs)
30. We set out the results of our initial comparison of PCA prices based on six
illustrative profiles in the UIS (see Appendix C, Annex 2): figures C1 to C12
showed weighted average price against market share. These figures were
excised from the published version of the UIS as a number of parties said
their market shares were confidential. Appendix E shows revised versions of
these figures using ranges for market shares.
RBS response to UIS, section 3.1.3.
RBS response to UIS, section 3.2.2 ii) b).
Barclays response to UIS, paragraph 4.5.4.