Cruickshank to present review findings to banks
Friday 26 November 1999
The request has bolstered hopes that the year-long review may soon be coming to a close.
However, there is also disappointment in some quarters that Mr Cruickshank has not gone as far as the banks would like in meeting their requests for more scope to put forward their own views about improving industry competitiveness.
The review team has largely completed its fact-finding and will now retire to consider the results. The research has involved visits to the United States, Australia, France, Germany, Canada and Scandinavia, with which the British banking sector is being compared.
The banks have been irritated at being asked for large amounts of detail on the profitability of their operations on a product-by-product basis, information which they often do not have, while being denied the opportunity to put their case.
The review, launched by Gordon Brown in November 1998, was initially meant to concentrate on the provision of credit for small businesses but has been widened to include broader consumer issues.
In September, the Chancellor agreed to an indefinite extension. This was to allow more time for Mr Cruickshank - who is also running Action 2000, the government-sponsored campaign - to complete his work.
The banks argue privately that Mr Cruickshank has failed so far to show he understands their market. His interim report, published in September, spoke of greater competition in the US resulting in lower rates for small business lenders, whereas the reality is that banks in the US still largely enjoy regional monopolies, long since swept away in the UK.
The report also highlighted the banks' regulatory framework as a major reason for lack of competition in high interest rates charged on some products. But Mr Cruickshank's request for the Financial Services Authority to take responsibility for promoting competition has been rejected by the Government.
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