Following on from the findings of the Competition and Markets Authority on the topic of transparency/competitiveness in banking, the Chairman of the Treasury Select Committee, Andrew Tyrie MP, provided his thoughts in an interview this morning with Radio 4- listen again from 1 hour 17 minutes in.

Noteworthy points gleaned from the interview with Mr Tyrie are as follows:

  • To start off:

“Their report does not seem to address the central question and that is that millions of people out there with their bank accounts don’t know and on the basis of the information they are provided with at the moment; they can’t know how much they are really being charged by their Banks. I and the Treasury Select Committee think that people should know and until they have that information there cannot be meaningful choice in banking and if there isn’t a meaningful opportunity to choose between Banks then there won’t be enough competition and people will remain cautious about switching and even those who want to will see little point in doing so.”

  • Rob Young asked if the CMA should have looked at bigger solutions for example breaking up the Banks as more Banks would lead to more competition and therefore people using them would be better off. Mr Tyrie responded:

“Well they did look at that early on; they rejected it as the Government also rejected it shortly after banks were part-nationalised. It would have been a big job to break up the banks but perhaps we should have done early on; we’ve missed that opportunity – what we’ve got to do is bring enough competition into banking to enable customers to get meaningful choice. We’re going to have the CMA in to justify this report in depth in front of the committee and we’ll be able to get a bit closer to these new ideas that they’re putting out in this very long report that hopefully will really crack this nut. You have got to remember that this has been going on now for well over 20 years/quarter of a century. We’ve had reports saying banking isn’t competitive enough – it still isn’t competitive enough; it’s effectively in many respects a cartel”

  • Commenting on the reaction from challenger and smaller banks, Mr Tyrie stated:

“I’m not surprised small banks are upset; we’ve been waiting for a generation or more to get meaningful competition in at the bottom end of banking and have more choice. What concerns me a bit is that the CMA might have been overwhelmed by information from banks that are highly skilled in assembling it and effective lobbyists; that is something that we will also be looking at. It’s crucial that we don’t go round it in another circuit sort of like reports and reviews about all this that we haven’t mentioned so far in this interview; the question of more competition on overdrafts where people are often being charged money without realising just how much they are shelling out to their banks – we can’t carry on like this.”

  • On the issue of technology being the answer Mr Tyrie asked:

can we rely on customers to grapple with the new technology in sufficient numbers to get the competition we need’ – I hope that we can and I hope that they’re proved right but you have got to ask yourself ‘how many people out there are going to want to supply all this extremely sensitive information to a price comparison website in the way that they are suggesting.”