The European Commission has decided to investigate retail banking and general insurance sectors in the European Union.

The probe will examine whether competition is working in these markets and whether markets are competitive enough to deliver their full benefits to consumers.

The investigation will bolster the commission’s initiatives to remove regulatory barriers within the single market for financial services.

The commission will begin its investigation into retail banking this month and the insurance sector – including reinsurance and insurance brokerage – will be examined later this year.

EU Competition Commissioner Neelie Kroes says the inquiry is important to increase the competitiveness of the EU economy. “They are not quick fixes, but show my commitment to using the competition rules to effect long-term structural improvements to the EU economy.”

A spokesman for the Association of British Insurers says the UK has a thorough competition regime based on the European Union model on how competition is run. “The British insurance market is open and highly competitive as it stands, and we will co-operate fully with the directorate general on competition.”