Britain’s big banks could be broken up after the country’s competition watchdog launched an in-depth investigation into services for small business customers and personal accounts because of a lack of competition.

It marks the latest step by authorities to break the dominance of the country’s big four lenders and is likely to keep the industry in the political spotlight ahead of next year’s election and beyond.

The Competition and Markets Authority (CMA) said yesterday banks had not done enough to meet the needs of retail customers or small and medium-sized businesses, such as making it easier to switch banks or providing clear information on fees.

The investigation, which may take until summer 2016 to complete, had been expected after the CMA said in July a full investigation was on the cards.

The CMA, which became Britain’s new competition watchdog in April, has the power to order a break up of banks considered too dominant, as well as so-called behavioural remedies, such as improving information given to customers.

Britain’s big four lenders – Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC – have about 77 per cent of the 65 million personal current accounts in Britain. They also have 85 per cent of the 3.5 million business current accounts and provide nine out of every 10 business loans, the CMA said.

Analysts have said outcomes could include forcing banks to sell branches. That could include business banking in Scotland, where RBS has 39 per cent of the market and Lloyds 30 per cent.

The CMA will appoint a Market Reference Group to investigate issues and decide what action to take.