Recent proposals from the UK Competition and Markets Authority bolster the position of the big banks, according to Alex Hawkes at This is Money:
“Big banks have to set aside substantially less capital to issue mortgages. They pay rock bottom rates for funding because they are sitting on hundreds of billions of pounds of current accounts and other balances paying no interest.
“They control access to the payments system, and on top of that, challenger banks now have to pay an eight per cent corporation tax surcharge introduced to lighten the load of the bank levy on the biggest banks.”
Simply providing the public with more information and making it simpler to switch banks does nothing to remove these structural barriers to competition. Since the majority of us tend to view the big banks as being as bad as one another, and in the absence of genuine competition from the challenger banks, most people will simply leave their money where it is. In this sense, the so-called “reforms” are a recipe for businesses as usual… at least until the next banking crash.