Banking Reform

Stephen Williams Excerpts

Thursday 14th June 2012 Commons Chamber

[Mr Hoban]

The hon. Gentleman should reflect for a moment on what happened when his Government were in power. Bankers were able to take their bonuses in cash in the year they were paid, while Lord Mandelson said that he was “intensely relaxed” about the filthy rich. What we have done since we came to office is put in place the toughest and most transparent pay regime of a major financial centre and ensured that shareholders have a stronger voice over bank pay. We have tackled the problem, which the previous Government simply neglected and allowed to fester and develop, thereby contributing towards the crisis that we have seen in the banking sector.

[Stephen Williams (Bristol West) (LD)]

Two of the core reasons why the Conservatives and the Liberal Democrats came together in coalition were to stabilise our public finances and to reform Britain’s broken banking sector. Our constituents tell us that they want more banks that specialise in lending to small and medium-sized businesses, as well as ethical providers, such as Triodos bank, which is based in my constituency. Will the Minister undertake to smooth the path through regulation for new entrants and also make it easier for people to move their money from existing banks to new providers?

[Mr Hoban]

My hon. Friend makes some important points. We need to make the regime easier when it comes to authorising banks, which is why the Bank and the FSA are looking at prudential and conduct requirements, to ensure that they are appropriate and not disproportionate, which is one of the criticisms that many potential new entrants make. However, he is also right that once we have new entrants to the market, they need to be able to attract business from other banks. We need to ensure that customers are able to switch their accounts more easily. An industry-led initiative will be launched later this year which will help with that, but it is also important that customers understand the costs of their accounts and are able to use that money to help them shop around and opt for better-quality or new providers, so that there is much more choice and diversity in the market.