Of Special Interest
- Financial wellness affects half of peoples’ mental or physical health, finds report
- Study finds traditional financial institutions embrace Fintech disruption
- Grass is greener for environmentally friendly businesses, finds Barclays
- Prospective homeowners would consider a 40-year mortgage to escape renting, finds Santander
- Millennials’ needs are changing the face of banking industry, says new report
- FS is putting consumer data at risk by failing to protect mobile apps, says Arxan
- A lack of belief in their ability holds 28% women back in work, says Cambridge & Counties
- ‘Which?’ reveals Scotland has lost over a third of its bank branches in eight years
- Next downturn unlikely to be as bad as 2008, according to S&P
- FCA reveals findings from first cryptoassets consumer research
- US consumers favour single mobile app for banking and payments
- Banks suffering major IT shutdowns every day, ‘Which?’ reveals
- The US will be a key offshore centre in 2019, says GlobalData
- Debit industry changes markedly in 10 years of the Debit Issuer Study
- UK's ‘Big Five’ face ‘too big to compete’ as small challengers secure stellar returns
- Banks as vulnerable now as before crash, says new study
- Leverage ratio a constant conundrum for European and US banks, says SNL
27th July 2012
UK regulator want end to current accounts
Lord Turner used a speech made in London this week to again call for the end of so-called 'free banking' in the UK. He stated, "...We need to recognise a central problem in UK retail banking – the impact on competition of free-if-in-credit banking,” he said in a speech in London. “One important barrier to competitive entry into UK personal sector banking is obvious – the fact that the core product, the current account, is usually given away for free, sold at below cost of production.
“It is not a sound basis for a long-term trust-based relationship between a competitive banking system and its customers.”
The logic in claiming that the product is offered below cost relies on the the inclusion of all retail costs, such as branches and branch staff, as current account costs and that profits from cross-selling be excluded from the calculation. Many would question the logic of both premises.
The government would be unlikely to associate itself directly with calls for the end of 'free banking' as this will be most unpopular with voters. Equally, it will probably do nothing to stop Lord Turner from working behind the scenes to achieve his ambition. Although the FSA is to be abolished soon Turner is considered one of the favourites to succeed Mervyn King as governor of the Bank of England next year. The central bank is to be the new master regulator of banks. The new Financial Conduct Authority may however be the key regulator under the new regulatory plan that will have control on pricing.