Delivering his interim report to the Treasury yesterday, Mr Cruickshank urged the Government to drop its earlier reservations about making promoting competition an explicit aim of the new Financial Services Authority. He argued that banks should not be allowed to continue hiding behind generous legal exemptions from anti-trust rules.
Under the new Competition Bill next year other sectors will be liable for swingeing fines for breaches of competition rules, and he could see no reason why this should not apply to the banking sector as well.
Mr Cruickshank also accused the banks of failing to deliver on promises to co-operate with the review and said that because of the delays that had caused, he was asking to be given "as long as it takes" to complete his investigation. His remarks sparked an angry response from the banks.
Barclays yesterday rejected charges that it and other banks had engaged in uncooperative behaviour and warned Mr Cruickshank that he risked taking an overly theoretical view of the industry.
Mike Davis, the Barclays director handling the review, said: "Banking is a fiercely competitive industry. It is regulated to protect depositors and the stability of the financial system. Any attempt to change regulation must not lose sight of these overriding principles."
Mr Cruickshank insisted that while some of his recommendations would seem arcane, their ultimate impact on consumers would be far-reaching and significant.
"Consumers will see a difference. It will mean much more choice. Products and services will be easier to access, easier to understand. There will be better products, better services," he said. "This is serious stuff."
Mr Cruickshank's other recommendations include:
n Making sure that the financial services sector has no "unnecessary" exclusion from the general UK competition law;
n FSA rules should be open to challenge by the Office of Fair Trading or the Competition Commission;
n The same scrutiny should apply equally to decisions by the FSA;
n The final arbiter of whether the rules hinder competition should lie with the Competition Commission not ministers.
Mr Cruickshank insisted that because of the banks' failure to supply data on profitability and pricing he was not in a position to judge whether there is evidence of widespread anti-competitive behaviour within the UK banking sector.
However, in a letter to Chancellor Gordon Brown, which accompanies his report, he made it clear that in comparison with the United States, British banking consumers suffer from a serious lack of choice and that he had little doubt that regulation was to blame.
Mr Cruickshank said he had decided to publish these recommendations - even though he was far from completing his review - to give the Government the opportunity to include them as amendments to the Financial Services and Markets Bill, which is going through Parliament.Reuse content