Banking escapes watchdog

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The Independent Online

In the week Gordon Brown called for tough new competition laws and appointed Ron Sandler, former chief executive of NatWest, to investigate long term savings, it emerged that key recommendations of last year's report into banking have been shelved.

Don Cruickshank, the chairman of the Stock Exchange who was appointed by the Chancellor to probe the banking system, found that banks overcharge customers by up to £5bn a year. He called for a Competition Commission enquiry into small business banking and a regulator to oversee payments transmissions, such as cheque clearing and direct debits.

The former is ongoing but has been held up by Lloyds TSB's bid for Abbey National and is not expected to significantly change the operation of the industry. The latter, dubbed Paycom, has been shelved and unlikely to see the light of day.

The Treasury is denying Paycom is now a non-runner but admitted its introduction would require primary legislation and, as it was not mentioned in last week's Queen's Speech, it is unlikely to be put to parliament before the end of 2002.

Indeed the Independent on Sunday has learned that the Treasury official assigned to dealing with the setting up of Paycom has now been moved to other tasks and no replacement has been appointed.

The failure to implement the key recommendations of the Cruickshank report is sure to anger small business leaders who welcomed his recommendations as an attempt to deal with "Rip-off Britain". They claim that the banks make £1.5 billion a year from payments transmissions.

Mr Brown's strategy of reviewing the workings of the financial services sector has yet to deliver any concrete results. The study by Paul Myners, the former head of Gartmore, into the life and pensions industry has led to criticisms from the industry, companies and investors.

The appointment of Mr Sandler to review the long term savings industry has been met with surprise. The former chief executive of Exco, Lloyd's of London and NatWest, is not seen as a heavy hitter in the City.