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LONDON, Feb 5 (Reuters) - Bank of England regulation of thebank payments system from April will increase competition andgive customers a better service, the central bank's executivedirector for financial stability said.
The payments system, owned by the country's big lenders,suffers from a "pretty endemic degree of inertia", AndrewHaldane also said on Tuesday. The bulk of expenditure is onmaintaining legacy systems.
"As of yesterday and the announcement from the Chancellor(finance minister George Osborne), that looks set to change,"Haldane told the launch of Intellect, a forum bringing togetherregulators, technology firms and banks to plan financialinfrastructure better.
Osborne said on Monday the payments system would be openedup to competition, signalling an end to the banks'self-regulatory set up.
"The scope here for doing things better is enormous,"Haldane said, adding the time was right for a rethink of whetherthe existing payments infrastructure was "fit for purpose" andwhat more could be done to help customers switch banks.
Haldane has suggested a utility payments system for allusers to plug into to ensure the technology is innovative.
The Bank of England becomes the main regulator for banksfrom April. Four banks - Barclays, HSBC,Lloyds, and Royal Bank of Scotland - hold 75percent of customer accounts, leading to talk of limitedcompetition.
Banks will have to begin investing in IT in any case so theyhave a full, consolidated picture of all their risks to feed toregulators, creating a wave of data over coming years.
Some in the audience told Haldane the money spent so far onspeeding up bank transactions to encourage account switching hasbeen a "total waste of time".
