MP: Financial crisis was due to weak competition

BARRIERS to entry must be cut in order to promote competition in the banking sector, former City worker Andrea Leadsom MP will say today.

A lack of real competition was a key cause of the financial crisis, as market concentration hindered the free entry and exit of banks, Leadsom argues in a report for the Centre for Policy Studies.

The Financial Conduct Authority (FCA) should also take measures to end a situation where banks are “too big to fail,” and instead can fail and exit safely, the report says.

Competition authorities have been too junior for too long, Leadsom will argue, calling for a new financial competition commission to carry out investigations.

The authority would also “ensure products and services offered are themselves subject to competition,” it says.

Leadsom is currently a member of the Treasury Select Committee.