Sam Gyimah
Main Page: Sam Gyimah (Liberal Democrat - East Surrey)Department Debates - View all Sam Gyimah's debates with the HM Treasury
Banking Competition
Sam Gyimah Excerpts(11 years, 10 months ago)
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Andrea Leadsom
Absolutely. I agree with the hon. Gentleman. That is a very good move. Personally, I think that a reversal of the Lloyds-HBOS merger would be better.
Secondly, the issue of a complete separation of retail and investment banking should return to the agenda. It is right that the Government should be the ultimate guarantor of retail deposits, but that guarantee should not extend to high-risk transactions. If an investment bank goes under, the losses should be borne by those who were happy to take the profits in better times, something to which the Government are already committed. Vickers has proposed ring-fencing already, but we should be examining again the prospect of a total separation.
Thirdly, the key issue is that of competition. The Government need to take further steps to inject greater competition into the banking sector. People have lost faith in the banking industry. Small businesses are finding credit hard to come by, taxpayers are furious at the billions spent on the bail-outs, pay for bankers is too often unrelated to performance, and customer service levels are, in many cases, utterly appalling.
Mr Sam Gyimah (East Surrey) (Con)
I congratulate my hon. Friend and her colleagues on organising the debate, which is long overdue. I thank her very much for that. On the issue of competition, one of the challenges, especially from the business banking perspective, is that 90% of the market is held by the five major banks. That means that if a small business is looking for a loan, it will find it incredibly difficult to get one if it has been turned down by its main bank. Also, if someone is offered a loan, they often have to agree to switch their account to the new bank. That lack of competition is a serious problem in terms of getting lending to businesses in the market. However, does my hon. Friend agree that such competition should be about not only having more banks but the diversity of provision in the sector? It does not have to be a bank that lends to a business.
Andrea Leadsom
My hon. Friend is absolutely right. We need far more diversity of financial service providers. Some of the issues I am about to discuss will address that because bringing down barriers to entry will, by definition in a capitalist society, encourage new entrants of all different sorts.