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The Chancellor Must Stand Firm on Banking Reform Amid Intense Bank Lobbying

Posted: 08/06/2012 00:00

We've recently seen a series of u-turns from the chancellor on Budget measures including the controversial pasty, caravan and charities taxes. George Osborne says he is now focused on the biggest things that matter to the economy.

Ahead of his annual Mansion House speech and the expected publication of the White Paper on the Banking Reform Bill on 14 June, we are calling on the government to stand firm on its banking reform commitments.

Financial stability is a key consumer issue and it is important the chancellor has ordinary people in mind when taking these reforms forward. But our survey found that 71% of people were not confident the government will act in the consumer's best interest when implementing banking reform.

One reason for this scepticism is the intense lobbying from the banks since the Independent Commission on Banking report, including a crescendo of scare-mongering on the risk of the end of 'free banking' and of big financial institutions leaving the country.

The chancellor must resist buckling under this pressure.

Plans to ring-fence risky investment banking from essential consumer retail banking must not be derailed by vested interests and must stick to the original timetable. While Which? supports the ring-fencing proposals, this also needs to go alongside a wider review of corporate governance in the banking sector.

We also want to see banks incentivised to provide better value products and decent customer service. So the government must make sure that the competition recommendations of the ICB Report are fully enacted to increase competition and choice on the high street. The introduction of portable bank account numbers would be one way to make it easier for people to switch bank accounts with confidence and force banks to genuinely compete for customers.

Consumers should never again have to foot the bill for a banking collapse that required a bailout to the tune of £2000 for every man, woman and child. Without strong action that shakes up the culture of British banking, we will all continue to pay the price.

 

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