While the UK has seen a plethora of new digital challengers enter the market to take on the traditional high street giants in recent years, competition is still being stifled by "regulatory intransigence", says a report from an All Party Parliamentary Group (APPG).

The Challenger Banking APPG is calling on the government to instigate a new "Big Bang", imitating the 1980s deregulation of financial markets.

The group argues that by removing the shackles from fintechs, the government can make strides in its "levelling-up" agenda for reducing economic imbalances between different parts of the country.

Says the group: "It is time for a new Big Bang to break the restrictive regulatory practices which enshrine the dominance and market share of the big five banks."

Among its specific recommendations, the report calls for more to be done to allow open banking to offer a view of each person’s financial situation.

In addition, the regulator should establish a Financial Services Compensation Scheme-style system for fintechs offering consumer access where their money is not protected by the existing FSCS model.

Banks should also be forced to offer their branches to challengers before closing them, with the government offering financial incentives to these challengers to open branches.

Finally, the report recommends making financial education a stand-alone curriculum item at primary and secondary school level.

Karen Bradley MP, chair of the APPG on Challenger Banks and Building Societies, says: "Levelling-up is a key Government priority and the current cost of living crisis only serves to reemphasise how important it is. Financial Services providers can play a big role, but overly cautious regulation is holding them back.

"Regulators fear of failure means many are forced to operate with one hand tied behind their back and this doesn’t have to be the case."

Read the report: