Banks express fears over inquiry

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The Independent Online
CONCERN IS mounting among Britain's leading banks about the increasingly hostile nature of the inquiry into the sector by Don Cruickshank, the former telecoms regulator, with a number of senior bankers privately expressing fears that the exercise risks degenerating into a bank bashing crusade.

One banker said yesterday: "We wanted to cooperate and we still want to cooperate. Our belief is that we have nothing to fear from a truly objective review of the industry.

"But we are starting to wonder whether it really will be objective. What we fear is that he will keep looking until he finds something."

The big clearing banks complain that they are still being kept in the dark about the objectives of the Cruickshank review despite being bombarded with requests for information, much of it highly sensitive and costly to collate with little explanation about the use to which it is to be put.

The concerns have emerged as Mr Cruickshank prepares to deliver a progress report to the Treasury today, in which he is expected to call for the new Financial Services Authority to take a more pro-active role in ensuring that banking regulations which act as an unnecessary barrier to competition are scrapped.

Some banks have also been alarmed to hear Mr Cruickshank express the view that the many detailed prudential requirements and money laundering regulations to which banks are subject are a key reason why products such as mortgages and current accounts are similar across the sector and ought to be scrapped.

However, he is understood to have come under strong pressure from both the Treasury and Howard Davies, the FSA chairman, to drop a recommendation that the new financial services watchdog be given a remit to promote competition within the banking and insurance sector and refocus his attention back on the banks themselves.

At least one major clearing bank was refusing until two weeks ago to provide information to Mr Cruickshank's staff because of concerns about potential breaches of client confidentiality. That dispute has been resolved, but it has left a sour taste.

The suspicions that Mr Cruickshank is working to a specific agenda have been fanned by talk within banking circles that some of the consultants' reports have been sent back after failing to come up with the right conclusion.