![HSBC and Barclays are two of the big four banks in Britain.](https://webarchive.library.unt.edu/dentonfracking/20141106200517im_/http://graphics8.nytimes.com/images/2014/11/06/business/dealbook/dbpix-banks/dbpix-banks-articleInline.jpg)
LONDON — The competition regulator in Britain said on Thursday that it planned to begin an inquiry into the dominant position of the country’s largest lenders in retail banking and in lending to small and midsize businesses.
After conducting a review this year, the regulator, the Competition and Markets Authority, said it still had concerns about the effectiveness of competition in the sector, including low numbers of customers switching their accounts, the lack of transparency for consumers seeking to compare accounts among banks, and continuing barriers to entry and expansion by smaller lenders.
Britain’s four largest banks – the Lloyds Banking Group, Barclays, the Royal Bank of Scotland and HSBC – account for more than three-quarters of all consumer and business accounts here, and there has been very little movement over time in their market shares, the regulator said.
“Effective competition in retail banking is critically important for individual bank customers, small and medium-sized businesses, and the wider economy,” Alex Chisholm, chief executive of the competition authority, said in a news release.
The regulator said it planned to appoint a panel of independent experts to conduct the inquiry and that it would later announce a timetable for the review.
There are about 80 million personal bank accounts, known as current accounts, in Britain, which generated about 8.1 billion pounds, or about $13 billion, in revenue in 2013, according to the Competition and Markets Authority.
Policy makers in Britain have been trying in recent years to encourage more competition in the retail and small-lending sector.
The Payments Council, a group that oversees payments systems in Britain, introduced a free-to-use service last year to make it easier for consumers to switch banks.
About 1.2 million accounts were switched in the first year of the service, according to the Payments Council.
Lloyds and R.B.S., which both received state aid during the financial crisis and remain partly owned by the British government, have been told by regulators to spin off branch units as a condition of their bailouts.
In June, Lloyds spun off the TSB Banking Group, a network of 631 branches, in an initial public offering. It plans to divest itself completely of the business by the end of 2015.
TSB, with about 4.5 million retail customers, is the seventh-largest retail bank in Britain. The company is worth £1.38 billion, based on its market capitalization.
R.B.S. plans to spin off its Williams & Glyn network of 314 branches in Britain near the end of 2016.
The Spanish lender Santander has emerged as a challenger in Britain through a series of acquisitions, including Abbey National in 2004 and Alliance & Leicester in 2008, but it still lags behind the four largest lenders, according to data released by the competition authority in July. It had a market share of less than a 10 percent last year.
A series of small lenders have also emerged in recent years, among them Virgin Money and the online-only bank Aldermore, but they have made few dents in the market shares of the largest lenders.
Virgin Money, which is partly owned by the billionaire Richard Branson, plans to list its shares in an I.P.O. in London this month after postponing its plans in October, citing market conditions.