Labour plan to cap market share of High Street banks

 
Woman taking money out of a cash point

The big high street banks would be forced to sell off branches to boost competition if Labour wins power.

Ed Miliband says capping the market share of the "big five" - HSBC, Barclays, Royal Bank of Scotland, Santander and Lloyds - would make it easier for new banks to challenge them.

The Labour leader says this will lead to a better deal for bank customers.

Labour also wants the Treasury to block plans by RBS to pay staff bonuses worth double their salary.

In 2012, the leading five banks accounted for 90% of the market share in Britain in terms of customer numbers and total lending figures.

In July 2012, the Labour leader said the banking industry had become "economically damaging and socially destructive" and needed far-reaching change - and Friday's speech will see him outline what the party would do if it won power.

Mr Miliband will argue that what he calls a "living standards crisis" for those on low and middle incomes can only be addressed by making long-term structural changes to the British economy, including banking.

Explaining the bank branch proposal, shadow chief secretary to the Treasury Chris Leslie said: "We have got to give customers more choice. Fees and charges are too high. There is not enough of a sense of competition, a hunger among the banks to serve customers."

What is a challenger bank? Simon Gompertz explains

Politicians from all parties have called for more competition in the industry, saying this would promote better deals and service for customers.

The government has passed new laws to force regulators to produce greater competition in banking, acting on recommendations of the Parliamentary Commission on Banking Standards and the Vickers Commission.

Responding to reports of Mr Miliband's planned announcement, a Conservative Party spokesman said the Labour leader was talking about a problem "that was created by the Labour government he was at the heart of".

Start Quote

You [Labour] are playing fast and loose with millions of people's jobs”

End Quote Tory MP Mark Garnier

He added: "That's why part of David Cameron's long-term economic plan is about fixing our banking system - by increasing competition on the High Street, ring-fencing retail from investment banking so that no bank is too big to fail, and increasing lending to business.

"There is already greater choice on the high street now than there was under Labour.

"Our changes will mean a more secure banking system for businesses, hardworking people and their families."

In a separate development, Labour has denied Conservative claims that if the government were to block large bonuses at the RBS that it would damage the bank's ability to hold onto high performing staff.

Under new EU rules, the bank - which is largely government owned - must seek permission from shareholders if it wants to award bonuses greater than 100% of salary.

The Treasury say RBS have not made any requests regarding bonuses and payments to staff across the banking sector as a whole are down.

But Labour's Chris Leslie said it was "not acceptable at a time when there is a cost of living crisis and banks to be going beyond that 100% level at RBS - that's just wrong".

Tory MP Mark Garnier said bonuses were a "reward for enterprise" and he accused Labour of attempting to "destroy the one industry we have which is a net exporter of services".

He told Mr Leslie: "You are playing fast and loose with millions of people's jobs. You are playing fast and loose with the economy and it is just nonsense."

 

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  • rate this
    +6

    Comment number 210.

    Gosh. It is the same old envy-driven, bash-the-bankers nonsense from Labour. I see that their poll lead is down to three points. No opposition has ever won from such a poor position a year before a General Election. And frankly, how could Labour ever be re-elected after it got virtually everything so very badly wrong in its final time in government?

  • rate this
    +5

    Comment number 209.

    201. "The next step is to introduce asset taxes". That would be a draconian old style Labour move. I'm a Liberal free market capitalist myself (ie I think there should be enough regulation to stop the evils of an unrestrained free market economy). A moderate next step would be to decrease 2nd home ownership through council tax. No penalising people, do it gently ie discourage rather than penalise

  • rate this
    +1

    Comment number 208.

    Get real, who on earth would want to buy any retail outlet at the moment particularly one selling financial products when there is the internet. I aint saying its right but its a fact. Another shinning example is estate agencies if anything doesnt need a hight st presence its those - completely outdated

  • rate this
    +1

    Comment number 207.

    196. feedbackloop
    Believe me I do know conservatism be honest john major would be one of them I would actually listen too. He seems fair & certainly would not cut from the bottom unlike these eton boys are. All for making money but not from other peoples expense. That behaviour & low moral got us in this mess in the first place.No real sign there learning even from labours mistakes.

  • rate this
    +1

    Comment number 206.

    If people want more competition in the banking industry then they need to vote with their money - change banks. I left HSBC for Natinowide over 20 years ago and would never go back, but I guess most people still think its too much trouble to change!

  • rate this
    +12

    Comment number 205.

    Over the past few years I've opened 5 accounts with different banks. I have never once needed to physically go to a branch, not even to open the accounts. As with almost all other retail/service experiences, the future is online, not on the high street. Online access creates competition, not outdated physical outlets. Ed and Labour are living in the 90s.

  • rate this
    +2

    Comment number 204.

    199.frankslad
    "Again you avoid the question"
    =
    No I didn't. You can't write. Write one the makes sense and I'll answer it.

    I did not advocate the forced selling of anything; I opposed the forced rescue of bankrupt businesses (banks), so you're wrong there.

    "why the need for govt to interfere?"
    =
    I oppose their interference, and cite my opposition to their anti-competitive bank bailouts.

  • rate this
    -1

    Comment number 203.

    189 Magic Tricks "Now they are operating fine" [of the banks]. Are you mad? TO BIG TO FAIL. The banks are operating in exactly the way they did before the 2008 USA sub-prime lending crisis, with the same regulation. The result will be another disaster. That's the whole point, if they are mad smaller they will be able to be allowed to fail, which means normal free market forces will apply.

  • rate this
    0

    Comment number 202.

    191 Seems u have diff breaking out of mind-set that world is div into good cop/bad cop. Pols merely human & doesn’t matter what side of ledger they sit. Pre-occupied by getting reelected & any notion that "caring" is primary motive is illusionary. Pols tend to look out for themselves rather than to act as saintly public stewards. Gen leads to harmful policy; it matter not the political colour

  • rate this
    -8

    Comment number 201.

    This is a sound move by Ed who is in touch with public concerns. The next step is to introduce asset taxes; there is no reason for house owners to keep any profits they have made on buying a property. That money is needed to fund the poor of this country.

  • rate this
    +2

    Comment number 200.

    184. fallingTP
    Might be best reading my other comments before commentating yourself.
    Get my figures facts from official gov websites etc. Are you telling me there not correct then? Dont think there that stupid are they.Well never know suppose.Anyway comes from them & I dont make things up to suit my agendas.

  • rate this
    -3

    Comment number 199.

    190 - Sally -
    re b) - no it doesn't reveal ignorance - it's just a statement of fact - your question was how many businesses I'd started - repeat none of your business.
    Again you avoid the question.
    Your prev posts supported the article re existing banks being forced to sell branches so 'new' banks up competition - if new banks have a good business model - why the need for govt. to interfere?

  • rate this
    0

    Comment number 198.

    they are a wunch of bankers

  • rate this
    -1

    Comment number 197.

    Banking regulations aren't fit for purpose - they are harming rather than protecting consumers, by preventing new entrants to the market.

    Watch the C4 documentary "Bank of Dave" to see this in practice.

  • rate this
    +2

    Comment number 196.

    Mike, if you want to oppose conservatism effectively you need to understand it. The party attracts the wealthy via self interest - the same is true for Labour vs the interests of organised labour. However core conservatism is about giving people help to succeed in their lives and then giving them freedom to get on with it. As Major said this is a classless anti elitist proposition.

  • rate this
    +6

    Comment number 195.

    "Ed has only one policy Interfere with everything"

    That's the socialist way. History tells us that it never works.

  • rate this
    +2

    Comment number 194.

    193.thelostdot

  • rate this
    +1

    Comment number 193.

    190. Sally. That's "Bank On Dave". Don't forget the financial services authority threatened him with jail if he called himself a bank. Amazing given the things they allow banks to do.

    I'm reminded of Easter Island, they must have known, or at least some smart people must have been able to see the disaster looming through cutting down trees. Popular sentiment compelled them to continue!

  • rate this
    +6

    Comment number 192.

    174 Mike - reasons for vote, I support equal rights, equality of opportunity & oppose elites, but also oppose enforced equality of outcome. No-one (giver or receiver) is socialised by state reallocation of earnings. Our direct duty of care for others socialises us much more that the state ever can. I have voted for both main parties in the past & regretted it. I will not be voting for Miliband.

  • rate this
    -7

    Comment number 191.

    Only push people so far before they break. The way the condems are acting breaking point is a matter of time. Labour to me anyway wants all to flourish, Tories policy is rich flourish & poor know your place. Victorian standards of servitude comes to mind. Rich poor society only spells disaster in the end. Can`t all be rich, so be the same next best thing.
    Tory trolls top right earn your money,!!!

 

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