FSA in bid to create rivals to offer more banking choice

 
City A.M. Reporter
AS PART of efforts to boost new entrants into the banking sector, the Financial Services Authority said yesterday that it will review applications for banking licences that were unsuccessful.

Financial services minister Mark Hoban said the review would aim to ensure the current requirements are “proportionate” and “do not create excessive barriers to entry.”

The government wants more choice in banking which is dominated by the “big four” lenders, HSBC, Lloyds, Barclays and Royal Bank of Scotland.

As part of this, Hoban yesterday also took steps to reduce the power of the country’s big banks to set policy for the payments system, which handles trillions of pounds.

Hoban wants a new body that would be directly supervised by market regulators, ending a system whereby banks, who own the payments networks, also decide policy.

“We need a payments system that responds to the needs of customers and is not just run for the banks,” Hoban said.

The government is also cracking down on the mis-selling of financial products. The Office of Fair Trading will get powers, with immediate effect, to suspend licences for firms such as payday lenders who supply credit.

Stripping a firm of its licence can currently take years because of the lengthy appeals process.