Banking Competition

Tessa Munt Excerpts

Thursday 12th July 2012 Westminster Hall

[Tessa Munt (Wells) (LD)]

I meant no discourtesy by not being here earlier; I had another meeting. I wish purely to echo the concerns expressed by my colleagues. Although tradition requires that, as I am Parliamentary Private Secretary to the Secretary of State for Business, Innovation and Skills, my right hon. Friend the Member for Twickenham (Vince Cable), I should not necessarily contribute fully to this debate, my enthusiasm for it and for the whole subject is without bounds, which is why I backed the request for this debate.

The Liberal Democrats have been warning for a long time that banks are precariously large and inadequately regulated. I found myself reading an Adjournment debate initiated on 19 June 2000 by my right hon. Friend, in which he discussed the Cruickshank report. It is good to see that the Government are now making moves in the right direction.

Many of the headline issues that I would have mentioned have been brought up by my colleagues. For example, people do not transfer from bank to bank; banks are still too big to fail; there are barriers for entering and exiting the banking market; and the market is concentrated into fewer providers, with little choice for consumers and customers, because of various things that have happened over the years.

I should like to highlight some concerns of my constituents in rural Somerset. The situation is such that everybody must have a bank account. Those who work have to be paid through a bank account, and those who do not work and may need some assistance from the taxpayer with their everyday costs therefore need to have a bank account to receive any benefit or help that they get. The move to universal credit will require larger numbers of people to have basic bank accounts. I am concerned that those bank accounts—that sector of the market—may be concentrated in a few ethical banking organisations, particularly the Co-operative bank and credit unions. I should declare that I hold a Co-operative bank account. I made a positive decision to switch to the Co-op, mainly because I felt that it was an ethical bank. However, it should not carry an undue burden in helping people who need more assistance with their banking than others.

The restrictions that are being placed by various banks on the features and functionality of basic bank accounts make it much harder for people to access their own cash, particularly in a rural area, where they may have to travel eight or 10 miles to find a free cash point. I am particularly concerned about that. The ATM network is creaking slightly. Certain parties withdraw from offering free ATM services, meaning that others have to carry a greater burden. I am acutely aware of that issue and we, as a Government, might want to deal with it. We should try to ensure that more people have access to their own cash. I am glad that a number of banks are now issuing £5 notes in their cash machines. That is particularly helpful in my constituency for people who need to use small sums and want to keep complete control over their cash flow. However, only a certain number of banks are helping to bring such elements together. We should consider carefully how they might be developed and how we might ensure greater fairness across the whole market.

The portable account number mentioned by the hon. Member for South Northamptonshire (Andrea Leadsom), who called the debate, is a fantastic solution. We do that with our phones and all sorts of things, and it would be helpful if people could switch their accounts much more smoothly.

I do not wish to add more—otherwise, I shall find myself in trouble. I hope I have expressed adequately my concerns and those of my colleagues.