July 25 2014 Latest news:

The attempts by Virgin Money to enter the UK high street banking market would aid competition and work to the benefit of consumers, according to a leading watchdog.

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With news of Virgin Money’s efforts to secure £2bn to buy branches of Northern Rock and Lloyds branches, Which? executive director Richard Lloyd said the long awaited arrival would be “good news for consumers”.

“The prospect of a new high street bank is good news for consumers as competition in retail banking has really suffered since the financial crisis.

“If Virgin can offer genuinely competitive products this should force the existing players to up their game.

“When deciding on the sale of Northern Rock and Lloyds branches, the government should apply a public interest test to ensure that it will genuinely benefit consumers by enhancing competition.”

The five largest banking groups – Lloyds, Santander, Barclays, HSBC and RBS/Natwest - account for 85pc of the current account market. This compares to 74pc in 2007 before the financial crisis.

Lloyds is attempting to sell 600 branches following an EU competition ruling on the government bailout of the bank, while Northern Rock is looking to sell 70 branches.

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