Firms back Ed’s plan to break open banking

 
Tim Wallace
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BUSINESSES yesterday welcomed Labour leader Ed Miliband’s call for more competition in the banking sector – though the Conservatives insisted the coalition is already addressing key problems in the industry.

Miliband wants to break open the market, forcing the biggest banks to sell off more branches, allowing at least two more “challenger banks” into the top end of the market, and making it easier for customers to switch their current accounts.

Firms praised the suggestions, arguing that renewed competition will be beneficial to customers, and offers the best chance of raising lending.

“The Federation of Small Businesses has long called for more competition in the banking sector as 85 per cent of the market is controlled by just five banks,” said a spokeswoman from the group. “With four in 10 firms refused credit in the second quarter, we feel increasing the choice for business is the only way they are going to start to get a better deal.”

The Institute of Directors agreed, arguing “the problem with the banking system is not too much capitalism but too little.”

“New entrants to the market would bring more competition, and therefore drive up the quality of service available,” said Graeme Leach.

But the Conservative party argued it is already taking the appropriate steps.

“Ed Miliband and Ed Balls had 13 years to reform the banks when they were at Gordon Brown’s side, but failed,” said Matthew Hancock MP.

“This government set up the Vickers Commission and is implementing its recommendations to competition.”