Labour leader Ed Miliband today announced plans to break the monopoly of the big 5 banks, creating two new ‘challenger banks’ in a policy move designed to tap raw public anger following the banking crisis, recent scandals and continuing failure to tackle the toxic bank bonus culture.
Miliband’s speech was delivered this morning at the University of London’s Senate House, as the Financial Conduct Authority announced yet another banking inquiry – into allegations of systemic fraud against RBS, this time involving struggling SME businesses .
Commenting on Labour’s policy announcement, Joel Benjamin of Move Your Money said:
“Labour’s calls for a market cap in retail banking and more competition in the sector are welcomed: 2.4 million people switched accounts in 2012/13, and in September, 7-day switching made it even easier for customers to move banks.
"Compared to countries such as the USA and Germany with a strong regional banking network, the UK is still dominated by large too big to fail banks. Until this changes, the UK will lack real competition and alternative banking models. As a major stakeholder in two of the UK's largest banks, the government has a unique opportunity to make the banking sector serve society instead of continuing to serve itself. More must be done to fix Britain's broken banking system.”
In the UK, just 5 banks RBS, Lloyds, HSBC, Barclays and Santander enjoy 90% market share. The big 5 banks also own the back-end payments system , preventing new competition. In Germany, 2000 banks compete for 70% market share.