Financial Services: Competition

Lord Davies of Oldham Excerpts

Thursday 22nd October 2015 Lords Chamber

[Lord Ashton of Hyde]

My Lords, the Government are certainly anxious to have a proper regulatory system and will of course do whatever they can to make sure that we do not have regulatory chaos.

[Lord Davies of Oldham (Lab)]

But, my Lords, the Government’s efforts to improve competition in the banking industry are lamentable. Two years ago, they introduced measures to encourage banks to offer more information to account customers, and the result is that only 3% of customers change their accounts in any year. It is quite clear that something more significant needs to be done and the Government need to take action to improve competition against a background where 77% of current accounts and 85% of SMEs are with the big four banks. I remind the House that two of those banks were bailed out only a few years ago.

[Lord Ashton of Hyde]

My Lords, the switching service which the Government introduced has enabled 2.1 million customers to switch. We agree that that should be increased, but the noble Lord omitted to mention that the CMA report out this morning stated that the switching service is functioning reasonably well. Of course, we understand that switching accounts can only improve competition. We fully support the CMA’s provisional report and await its final report next spring, when we hope that it will have some sensible and useful recommendations.