Speaking to the Treasury Committee this week, OFT boss John Fingleton suggested the company's current stronghold on consumers is damaging to the industry and individual choice, pointing out the difficulties of switching lenders.
"If we don't tackle the inertia issue and the switching issue then having ten banks in a world where consumers can't switch doesn't mean [the system] will be more competitive," he commented, according to the Daily Telegraph.
Mr Fingleton added that opposition to the link-up back in 2008 was largely flattened by the "juggernaut" of support for the plan and said the OFT's position on the merger remains unchanged from two years ago.
Former business secretary Lord Peter Mandelson gave the green light to the plan citing the pressing need for financial stability, but MPs were told that the deal left the UK banking industry excessively concentrated.
However, Mr Fingleton added that he was not necessarily calling for the two companies to be broken up entirely, stating that undoing the takeover may turn out to be as misguided as allowing it to proceed in the first place.
He called for strong powers to be handed to the coalition government's incoming regulator, the Consumer Protection & Markets Authority (CPMA). Mr Fingleton stressed the importance of preventing customer inertia and stepping in to eliminate it where it already exists.
Mr Fingleton's comments came after shares in the state-owned Royal Bank of Scotland surged amid speculation that the bank could be working towards exiting the government-backed Asset Protection Scheme by the end of this year.
By Tony Aynsley