The “Big Four” British banks at the heart of the £75 trillion a year payments system face a major shake-up after the regulator launched a full-blown review into their charges and the limited choices on offer.
Barclays, HSBC, Lloyds and Royal Bank of Scotland are the main owners of systems such as BACS and Chaps and the major ATM networks which smaller challenger banks must use to move their clients’ money around the UK. This includes provision of the all-key sort codes which are at the heart of identifying banks and branches.
The review will also cover the rapidly growing, digital-payments sector which includes businesses like PayPal and Monitise.
The move comes just months after Hannah Nixon was appointed as the UK’s first Payment Systems Regulator.
At the regulator’s launch in April, she said: “Our approach will bring change to the industry, injecting competition and innovation where it is needed most, and will put the interests of the people and businesses that use payment systems front and centre.
“True, long-lasting change will be difficult, but we have the powers and the people to make it happen.”
Today she launched her first inquiry, which will cover the supply of indirect access to the payment system. This will investigate how easy or difficult it is for the Big Four’s competitors to access the payments system, the charges made, transparency about such access, the quality of technology and the demand for potential alternatives to the current set up.
Ms Nixon has powerful weapons in her armoury to enforce change if she finds the current system is not working or is unfair. She can single out specific banks, fine them, order changes, advise the Bank of England and Prudential Regulation Authority to make changes and even call for a full-blown Competition and Markets Authority inquiry.
Ms Nixon warned: “Parliament has given us very strong powers. If firms do not step up to the mark we will use those powers to issue directions, impose fines and impose obligations that will force individual players to act differently.”
She plans to publish an interim report by December or January next year with a final report due in April or May of 2016.Reuse content