For the whole financial sector, five years since the collapse of Lehman Brothers will be a time for the media and policy makers to reflect on where the industry is now placed and where it is heading in the future.
No doubt, most people have their own analysis on what still needs to be fixed; remuneration and banker conduct remain dominant threads; but perhaps more importantly there should be focus on competition and customer experience. As chief executive of the Payments Council, I speak regularly to politicians, businesses and charities about their views on the wider banking system. I agree that there needs to be an on-going conversation, with all stakeholders, but we must be cautious to remind ourselves that while reform may sound wise in practice, rushed and unnecessary reform can damaging and costly in the long run.
Over recent months we have seen a government consultation into the future of how the payments system should work, as well as recommendations from the Parliamentary Commission into Banking Standards. Looking at how the system can work best for business and individuals is in everyone's interest, but rebuilding how payments are made, may sound trivial, but in the interest of no one.
As Chancellor George Osborne stated earlier this year, the payments system lies at the heart of the banking system. Without it, ordinary consumers, charities and SMEs simply could not function. It is very much the hidden wiring that allows the economy to function.
There are genuine concerns that suggest how it currently works inhibits competition in the marketplace and that the solution lies in 'account portability' and starting from scratch. I understand some of the questions raised and some of the merits, but would add some points to its critics. Importantly, the payments system needs to be robust to deal with the volume of transactions every second of the day. The economy cannot afford to implement a system that cannot guarantee the same security as the current system.
Next week's launch of the Current Account Switch Scheme will allows bank customers to switch bank account in seven days, will not only help improve service, but increase competition in the marketplace. I would note that this roll-out is half that is recommended by the EU. This is in addition to various other systems that have been put in place over the past decade and over the next few years too.
I would stress that we need to see how this works in practice before there is any consideration of wider reform. The repercussions of this should not be underestimated. Tearing up bank infrastructure would cost billions to rebuild and ultimately see the end of free banking as we know.
The changes taking place in the market represent a good move for the British public and we should hopefully see the positive effects in the years to come. Any regulator or politicians thinking of introducing wider reforms should be aware that ill- judged decisions could be costly to us all.
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