{"id":44112,"date":"2014-06-24T14:09:00","date_gmt":"2014-06-24T14:09:00","guid":{"rendered":"http:\/\/mostafa.openonline.co.uk\/?guid=66929e16a40174c6d683db6deaeabd1c"},"modified":"2014-06-24T14:09:00","modified_gmt":"2014-06-24T14:09:00","slug":"speech-competition-in-banking-for-consumers","status":"publish","type":"post","link":"https:\/\/mostafa.openonline.co.uk\/?p=44112","title":{"rendered":"Speech: Competition in banking for consumers"},"content":{"rendered":"
\n

Good afternoon, and thank you Anthony Browne for that kind introduction.<\/p>\n

It\u2019s a great pleasure to come and speak at the BBA (British Banker\u2019s Association) today as Economic Secretary.<\/p>\n

As some of you may know, I came into this post with a long history of interest in your sector.<\/p>\n

I\u2019ve spent the last four years on the Treasury Select Committee.<\/p>\n

And the previous 25 \u2013 prior to becoming an MP \u2013 working in the financial sector.<\/p>\n

Where my last role was Head of Corporate Governance and Senior Investment Officer at Invesco Perpetual.<\/p>\n

In fact, I was in that position back in 2007 when we saw the near collapse of the global \u2013 and UK \u2013 financial system.<\/p>\n

And despite seven years having past since.<\/p>\n

So significant were those events.<\/p>\n

And the resulting fallout, which is still echoing now.<\/p>\n

That it\u2019s still almost impossible to talk about our financial sector without talking about the financial crisis – <\/p>\n

But today, I\u2019m going to give it a go.<\/p>\n

Because whilst we cannot \u2013 and must not \u2013 forget about the past.<\/p>\n

And while we need to be aware that there is still more to be done to repair the damage left.<\/p>\n

Today, I want to focus on the future. <\/p>\n

And it\u2019s a future that we should be excited about. <\/p>\n

As a country, where our economic measures are taking hold and growth is returning.<\/p>\n

But also as a global centre for financial services.<\/p>\n

Where the UK is delivering exciting new technologies and products to benefit people and businesses. <\/p>\n

The way that banks are talked about today is often based around the subject of social responsibility. <\/p>\n

Their responsibility to support UK businesses. <\/p>\n

To give people a fair deal. <\/p>\n

Certainly to make up for the damage done by the financial crisis.<\/p>\n

Which is \u2013 of course \u2013 absolutely right. <\/p>\n

But as we all know, banks themselves are \u2013 like other industries \u2013 commercial, private sector businesses that need to make money.<\/p>\n

And there\u2019s nothing wrong with that.<\/p>\n

In fact, making profit is key for economic growth.<\/p>\n

And in securing a strong future for our children and grandchildren.<\/p>\n

So you will always hear me speaking up for profitable businesses!<\/p>\n

But as with all business, it\u2019s essential to remember that most fundamental principle of commerce: <\/p>\n

That the customer is king! <\/p>\n

When that principle is forgotten, that\u2019s when things go wrong.<\/p>\n

As Adam Smith said so long ago in The Wealth of Nations;<\/p>\n

Free enterprise makes us all wealthier.<\/p>\n

But free enterprise requires \u2018free entry\u2019 and \u2018free exit\u2019 of market players.<\/p>\n

And that\u2019s why over the last few years we\u2019ve focussed huge effort on enabling \u2018free exit\u2019.<\/p>\n

By addressing too big to fail in the banking system.<\/p>\n

But we are also putting a great focus on \u2018free entry\u2019 of new players.<\/p>\n

And that means making it much easier to set up a bank.<\/p>\n

And much easier to gain market share.<\/p>\n

In short \u2013 much more competition!<\/p>\n

So the reforms this government is making to financial services.<\/p>\n

Are as much about competition as they are about safety, and stability. <\/p>\n

While a safe financial sector is absolutely essential.<\/p>\n

It isn\u2019t enough \u2013 <\/p>\n

We need real competition between banking service providers.<\/p>\n

Where customers can be won and lost.<\/p>\n

And where firms have to offer the best services and products to be successful. <\/p>\n

Creating the right foundation for this \u2013 as you\u2019ll know \u2013 has required some pretty fundamental changes by government. <\/p>\n

We\u2019ve created a new Payments Systems Regulator to look at longstanding competition issues – <\/p>\n

You can\u2019t be a bank without payments.<\/p>\n

And you can\u2019t compete with banks without payments.<\/p>\n

So access to these systems needs to be fair. <\/p>\n

We\u2019ve given both of the new financial services regulators formal competition objectives to make sure competition is ingrained into regulation. <\/p>\n

And there have already been some big pro-competition changes on this front.<\/p>\n

Like the steps that have been taken by the Prudential Regulation Authority (PRA<\/abbr>) and Financial Conduct Authority (FCA<\/abbr>) to lower the regulatory barriers that prevent new banks getting started.<\/p>\n

These do look to be having a big impact. <\/p>\n

The FCA<\/abbr> and PRA<\/abbr> are currently talking to around 25 potential new banks. <\/p>\n

And we have newer banks already offering more choice on the high street. <\/p>\n