Newspaper article The Evening Standard (London, England)

What Banks Are Most Concerned Government Must Take Care Not to Derail Banks

Newspaper article The Evening Standard (London, England)

What Banks Are Most Concerned Government Must Take Care Not to Derail Banks

Article excerpt

Byline: JOANNE HART

City Comment

IN exactly one week's time, the Competition Commission will deliver its report on small business banking to the Government. This was the investigation born of Chancellor Gordon Brown's desire to win cheap political capital by kicking an industry that nobody likes.

Brown asked Don Cruickshank almost three years ago to look into whether banks were being sufficiently solicitous towards small business customers. He was hoping to discover that the big clearers were to blame for Britain being less entrepreneurial than the US.

Cruickshank broadened his investigation to look at banking more generally and concluded that customers were being overcharged by [pound]5 billion. He said the Competition Commission should look into small business banking and that a payments regulator should be established to ensure banks were playing fair in areas such as money transmission and credit cards. Brown instantly followed Cruickshank's recommendation on small business banking and set the Commission to work. Payment regulation or legislation has been put on a barelyflickering back burner.

The Commission has more or less finished its report and clearing banks have recently been shown bits and pieces of it. The conclusions have been carefully concealed and it is these which provoked the greatest interest.

Possible remedies listed by the organisation earlier this year included a windfall tax, price controls, easier switching of accounts, greater transparency and payment of interest on current accounts.

That was then. This is now. Banks had just reported bumper profits and suggested they were set fair for 2001. They still seemed easy targets.

Since then the economy has become increasingly fragile, exacerbated by the US terrorist attacks. Banks now appear rather more vulnerable.

A windfall tax was given pretty short shrift when it was first suggested last March and would almost seem like bullying under present circumstances. …

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