Independent Commission on Banking

Debate between Lord Newton of Braintree and Lord Sassoon

Monday 19th December 2011 Lords Chamber

[Lord Sassoon]

My Lords, I am sure that there will be other occasions and places in which to discuss the Joint Committee’s important report on the Bill, so I do not want to get dragged too far into doing that. I recognise that, even for those of us who have been involved in the banking industry, confusing “regulation” and “supervision” can sometimes be a trap into which it is easy to fall. Supervision will be the responsibility of the Bank of England in the new structure, if the Bill is passed by Parliament.

[Lord Newton of Braintree]

My Lords, I have two quick questions. First, is there any estimate or expectation of a rise in the costs of retail banking as a result of these proposals? It seems to me that that must be a possibility. Secondly—I declare an interest as a 55-year long customer of Lloyds TSB bank in Harwich, Essex—given that the Minister has welcomed the sale of some Lloyds branches to the Co-op Bank, what will happen if we immediately use our switching rights to go back to another branch of Lloyds Bank if we are sold like a commodity?

[Lord Sassoon]

My Lords, the ICB estimates that the increased cost of borrowing could be of the order of 0.09 per cent to 0.16 per cent as a result of implementing these proposals. That is a very modest additional cost which is well within the smallest ever incremental change to the bank rate introduced by the Bank of England. I will not speculate about what might happen to bank customers where they are sold from one bank to another, but I believe that it is completely right that we should make it easier in all circumstances for bank customers to be able to switch their accounts. That is what the banking system is going to deliver.