25 October 2014

UK Chancellor plans on UK payments shake-up

04 February 2013  |  5766 views  |  0 Pound Coin Cash

George Osborne, the UK Chancellor of the Exchequer, has threatened to break up the UK's big banks if they fail to follow new rules to ring-fence risky investment operations from their retail operations, and promised a shake-up of the payment system to boost competition in the sector.

According to the FT, Osborne also told the audience at JPMorgan Chase that the government "will bring forward detailed proposals to open up the payment systems. We will make sure that new players in the market can access these systems in a fair and transparent way." 

The government plans to intervene in the UK payments system to speed up cheque clearing for ordinary customers and make it easier for new banks to compete with established ones. Osborne told his audience that UK payments are "too heavily dominated by the big four banks", which handle 75 percent of all current accounts. 

Osborne's speech coincides with the government's introduction of the Banking Reform Bill in Parliament, which will allow customers to switch bank accounts, to a competitor, within a week.

Last year's Parliamentary Commission on Banking Standards called for a reserve power to "electrify the ring-fence" if banks did not implement reforms. Osbourne's speech is expected to accept this recomendation

The Independent Commission on Banking, was led by Sir John Vickers in 2011. It recomended ring-fencing to protect core retail banking activities from future investment banking losses. Under the reforms, investment and High Street banks will also have different chief executives.

According to reports from BBC News, Osborne will say in his speech, at JP Morgan's administration offices in Bournemouth, that people are "angry" at the banks. But he said it was time to turn that anger "from a force of destruction into a force for change".

The speech comes at the start of a year of change for the UK financial regulation. You can read a full text of Osborne's speech here. 

The Financial Services Authority is being replaced by two bodies. The Prudential Regulation Authority, part of the Bank of England, will regulate financial firms, and the Financial Conduct Authority (FCA) will oversee consumer protection.

Meanwhile, the Finextra Community will gather for an exclusive dinner club this Februaury 26th to discuss the public's "anger" with banks and whether the banking community will be able to rebuild trust. 

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board, sign up now.

Related blogs

Create a blog about this story (membership required)

Related stories

29 June, 2012

Featured job

Competitive (base, bonus, benefits)
Boston, MA (USA)

Find your next job