Shortly after the Brexit vote, a number of challenger chief executives wrote to the influential Treasury Select Committee to ask them to push for creating a fairer market for lenders. This included tackling capital requirement rules, which currently leave smaller banks having to hold more capital to carry out the same loans as their larger counterparts.
However, challengers are now concerned Brexit has pushed any changes that might be made onto the backburner for the time being.
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Paul Lynam, chief executive of Secure Trust Bank, told City A.M. he is sympathetic to the Treasury's workload, but he is also wary the market cannot be left in its current state forever, noting "the government needs small banks to step up and fill the vacuum" when times get tough and larger banks clamp down on lending.
Another source close to the industry said: "Communication [with the Treasury] since Brexit has become very, very different, as so much focus is going into other areas. I'm hoping next year it will settle down...I'm not having a go [but] I do have concerns that Brexit will become the only debate in town."
However, the challengers also respect Brexit will take precedence in the Treasury's thinking for some time to come.
"We have to recognise our place in the world," said Lynam, adding he felt new chancellor Philip Hammond "absolutely gets" how important a more level playing field is for the industry.
A Treasury spokesperson said:
We have been consistently clear we want to see a more vibrant and competitive banking sector with new banks and more innovation, benefiting working people and businesses.
This will remain a priority as we prepare to leave the European Union.