LONDON, July 19 (Reuters) - Britain took steps to reduce
banks' power to set policy for the payments system, which handles trillions of pounds and affects the daily lives of millions of people.
Financial services minister Mark Hoban said on Thursday he wanted a new body that would be directly supervised by market regulators, ending a system whereby banks, who own the payments networks, also decide policy.
'We need a payments system that responds to the needs of customers and is not just run for the banks,' Hoban said.
The payments network, which handles cheques and debit and credit card payments, is run by the banks-funded Payments Council, a self-regulating body set up in 2007.
It angered the public in 2009 by deciding to scrap cheques from 2018, offering no real alternative, the government said.
While that decision was later reversed, the outcry sparked calls for the Payments Council to be reformed to reflect consumer interests, and to be directly supervised.
The government set out several options, including reform of the Payments Council, a step it said would not bring any increased regulatory oversight of payments policy.
The government now wants a new body, a Payments Strategy Board which would be funded by an industry levy and directly supervised by the new Financial Conduct Authority which itself will be launched formally early next year.
The Payments Council would be shorn of its central policymaking role.
The government said there were several reasons why the Payments Council has not been as successful as intended in developing new and existing services, such as allowing customers to make money transfers within hours rather than days.
'The main reason is the Payments Council is dominated by the UK's largest banks. This allows the largest banks to set the strategic direction for the Payments Council overriding alternate views or stakeholder interests,' the government said.
Payments Council chief executive Adrian Kamellard said it wanted a model that worked best for consumers, businesses, industry and the economy. 'That is not an easy balance to strike,' he said.
The government is also taking action in other areas to boost competition in retail banking as well as crack down on the mis-selling of financial products to vulnerable customers.
The Office of Fair Trading has been given powers, with immediate effect, to suspend licences for firms such as payday lenders who supply credit. Stripping a firm of its licence used to take years because of the lengthy appeals process.
The volume of payday loans has increased sharply, filling a gap in the market left by risk-averse banks who have reined in lending since the credit crunch.
'This is a good step towards ensuring the regulator has the resources it needs, and ensure there is no gap in supervision as these powers transfer to the Financial Conduct Authority,' said Richard Lloyd, executive director of Which?, a consumer lobby.
As part of efforts to boost new entrants into the banking sector, the Financial Services Authority and the Bank of England will also review applications for banking licences that were unsuccessful, Hoban said.
This builds on a previous announcement that the regulators would check whether rules for new entrants are not overly burdensome.
The government wants more choice in banking which is dominated by four lenders -- Barclays, HSBC, Lloyds, and Royal Bank of Scotland.
The Co-operative became more of a challenger on Thursday when it agreed to buy 632 branches that Lloyds must sell because of a state bailout out it received.
(Editing by Jane Merriman and Dan Lalor) Keywords: BRITAIN FINANCIALSERVICES/
COPYRIGHT Copyright Thomson Reuters 2012. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Datafeed and UK data supplied by NETbuilder and Interactive Data.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk!
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.