Britain's banks will be urged to make it easier for customers to switch to a rival institution. Andrew Tyrie's banking standards commission believes that more effective competition would be a major driver in tackling the consumer scandals that have dogged the sector.
The payments council, the industry body that oversees payments mechanisms, has paved the way for the introduction in September of measures to enable customers to switch current accounts between banks within seven days. Mr Tyrie and Treasury ministers are keen to see more customers switching: 1.35 million people moved their accounts last year.
Andrea Leadsom, a Conservative MP who has championed the idea, welcomed the direction of policy but believes full portability – where customers take their account number with them – is the best answer. “Seven day switching doesn’t end the tedious, time-consuming process of switching accounts, which is a burden for individual customers, SMEs [small and medium enterprises] and public sector organisations alike”, she said.
Full portability is likely to run up against firm opposition from the banks. It would mean “significant investment with very little benefit”, one senior banker said.
Mr Tyrie’s preferred option for splitting Royal Bank of Scotland into a good bank and a bad bank, containing toxic assets, has angered some of his colleagues, who say the issue was barely discussed during months of evidence sessions.
There is also resistance to a proposal for a clawback mechanism to be applied over many years, possibly up to a decade, on bonuses, so bankers could be penalised more effectively in the event of a disaster.
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