MPs to Get Tough on Banking?
The Treasury Select Committee is due to report soon into Britain’s high street banks with the expectation that the banks will be taken to task for anti-competitive behaviour and poor customer service.
For the last six months the committee has been investigating competition and choice in the banking industry. Part of the committee’s remit was to investigate whether the "big six" banks Barclays, HSBC, Lloyds, Royal Bank of Scotland (RBS) and Spanish banking giant Santander, taking the "lion’s share" of custom, had further consolidated their grip on the banking sector in the aftermath of the financial crisis.
In addition to recommending vigorous new regulation of the banking sector the Treasury Committee is expected to suggest that the yet-to-be-formed Government agency the Financial Conduct Authority take a greater role in overseeing banking operations in the future.
As well as recommendations that will benefit personal customers, the committee has been looking at business banking customers and is hoping that greater transparency on charges, Ts & Cs and an injection of competition into the sector, in the form of encouraging new banks, will give greater choice to business and consumers alike.
The committee’s chair, Andrew Tyrie MP, said:
"Competition has been looked at many times over the past 20 years but there has been little progress. Our report will be robust and will have radical suggestions to improve banking."
Another member, Andrea Leadsom MP, a former director of Barclays, will publish her own paper, Boost Bank Competition, for the Centre of Policy Studies later this week. Leadsom, like Tyrie, wants a break-up of the part state-owned banks RBS and Lloyds but believes Northern Rock should be mutualised:
"It’s extraordinary that there has been only one new banking license – to Metro Bank – in more than a 100 years. There are many ways we could improve competition, and help with the high cost to barriers of entry."
"First, Northern Rock should be mutalised instead of being sold. For example, we should look at whether the small business lending parts of RBS and Lloyds could be merged into a new bank, or whether RBS should be split into two.
"All options should be looked at including how to encourage new local credit unions or industry sectors to set up their own banks – like modern-day livery companies."
If you’re looking for choice take a look at our list of business banks.