Financial Services (Banking Reform) Bill

John Bercow Excerpts

Tuesday 9th July 2013 Commons Chamber

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 10—Sale of state-owned banking assets—

‘(1) Before the sale of banking assets in the ownership of HM Treasury, the Treasury shall lay before Parliament a report setting out—

(a) the manner in which the best interests of the taxpayer are to be protected in connection with such sale,

(b) the expected impact that any sale might have on competition for the provision of core services, customer choice and the rate of economic growth,

(c) an appraisal of the options for potential structural changes in the bank concerned including—

(i) the separation of the provision of core services from the provision of investment activities,

(ii) the retention of a class of assets in the ownership of HM Treasury,

(iii) the impact of any sale on the creation of a regional banking network.

(2) A copy of the report in subsection (1) shall be laid before Parliament and sufficient time shall be given for the appropriate committees of both Houses of Parliament to consider its findings before any sale decision.’.

Government amendment 5.

New clause 15—Local stakeholder banks—

‘(1) Within three months of Royal Assent of this Act the Secretary of State shall publish for consultation a report setting out proposals for the creation of networks of local stakeholder banks.

(2) This report shall contain an examination of stakeholder banking structures, defined as credit institutions that are not owned by private shareholders, with the with the aim of maximising shareholder returns. The examination should draw on experience in the UK and elsewhere and include—

(a) co-operative banks;

(b) credit unions;

(c) community development finance institutions (CDFIs);

(d) public-interest savings banks.

(3) The report shall examine potential impacts of the creation of networks of local stakeholder banks on—

(a) customer service and product range,

(b) accessibility to banking services for customer underserved by commercial banks,

(c) financial stability,

(d) accountability to local stakeholders.

(4) A copy of this report and the outcome of the full consultation shall be laid before Parliament and sufficient time shall be given for consideration of its findings by members of relevant committees of both Houses before any decisions are taken on the sale of state-owned banking assets.’.

New clause 12—Portable account numbers—

‘(1) Within six months of Royal Assent of this Act, the Treasury shall lay before Parliament a report considering—

(a) the adequacy of voluntary arrangements made by UK ring-fenced bodies to facilitate easier customer switching of bank account services; and

(b) legislative options for the introduction of portable account numbers and sort codes for retail bank accounts provided by UK ring-fenced bodies.

(2) The Chancellor of the Exchequer may, by affirmative order to be approved by both Houses of Parliament, confer powers upon the appropriate regulator to require UK ring-fenced bodies to comply with any specified scheme to establish the use of portable account numbers and sort codes.’.

New clause 14—Portable account numbers (No. 2)—

‘(1) Within 12 months of Royal Assent of this Act, the Treasury shall lay before Parliament a fully independent and comprehensive report detailing the options for introducing portable account numbers for bank accounts within the UK, including a full cost benefit analysis of the available options.

(2) The appropriate regulator may require banks and building societies to comply with any scheme to introduce and facilitate the use of portable account numbers, which is introduced in regulations made by the Treasury.

(3) No regulations may be made by the Treasury under this section unless a draft of the regulations has been laid before Parliament and approved by a resolution of each House.’.

Government new clause 1—Minor amendments.

Government new schedule 1—Minor Amendments.

[Chris Leslie]

Here we are again—a second bite at the Financial Services (Banking Reform) Bill. Today, we debate a series of amendments and new clauses that have been loosely grouped together under the title “Competition etc.” I shall speak in particular to new clauses 8, 10 and 12 in due course, but I shall start with new clause 8.

We felt it important to discuss the obstacles in the way of better competition in the banking sector. I am sure that it is not true of you, Madam Deputy Speaker, but many hon. Members have probably been with their retail bank since they were very young—not so long ago in your case, Madam Deputy Speaker. Although an aficionado of switching and looking at different services in banking, I must confess that I have been with the same bank since I was 14, and with no real logic other than the inertia that afflicts many customers: we tend to think that it is inconvenient to change bank accounts; we tend to think, “There is not much choice, so what is the difference or the point of shopping around?” It is this sense of a lack of competition and lack of choice that we want to remedy with the new clause, tabled with other amendments in the group.

There are significant obstacles to competition, particularly to new challenger banks coming into the system, breaking into the business and trying to do something to challenge the absolute dominance of the big five banks. The new clause would require the Treasury to publish a review considering the obstacles to those new challenger banks and ways of increasing the number of new banks coming into play.

Under the new clause,

“The Chancellor of the Exchequer shall instruct the Competition and Markets Authority to begin a full market study…into UK financial services institutions involved in the provision of core services”—

in other words, retail banking. The aim is to provide a structure to support better competition, dealing with obstacles in the way of allowing new institutions to break into the market and to consider what actions could be taken to facilitate the new institutions entering into general competition.