Out-Law News | 16 Jan 2014 | 2:13 pm | 1 min. read
Tony Anderson of Pinsent Masons, the law firm behind Out-Law.com, was commenting on press reports that Labour Party leader Ed Miliband was preparing to announce plans to end the market dominance of the 'big five' high street banks in a speech on the economy later this week.
"After three years of soul searching, including a report from Sir John Vickers and a Parliamentary Commission, the Banking Reform Act was passed in December and includes substantive measures for opening up the banking sector to greater competition," said Anderson, an expert in banking reform. "Why raise this as a proposal now?"
"UK banks need time to digest the new legislation and implement it. In any event, in a rapidly changing market with a greater focus on technology - including mobile banking and the increasing use of apps - it is debateable whether a branch sell-off by the majors is where bank strategy on market share is currently focused," he said.
The BBC's Newsnight programme has claimed that Miliband's plans to increase bank competition will include a cap on any bank's market share, which could be set at 25%. This would make it easier for new banks to challenge the market dominance of the 'big five': HSBC, Barclays, RBS, Santander and Lloyds.
The Banking Reform Act, which will implement the planned retail and investment banking 'ring fence' proposed by Sir John Vickers' Independent Commission on Banking in 2011, received Royal Assent last month. These structural reforms are due to come into force by 2019. The Act will also implement the majority of the recommendations of the Parliamentary Commission on Banking Standards, including the creation of a new criminal offence of reckless misconduct that leads to bank failure.