Miliband Unveils Plans to Fix 'Broken' BanksAug 28, 2017
Last week, Labour leader Ed Miliband outlined plans to overhaul the banking industry by forcing major banks to give up significant numbers of their branches in a bid to increase competition in the industry.
The proposals, announced on Friday 17th January by Miliband, would mean that the “big five” banks including HSBC, Barclays, RBS, Santander, and Lloyds Banking Group would all be forced to give up a number of their branches, while two challenger banks would be created in an attempt to stimulate competition within the troubled banking industry.
Drawing comparisons from the “big six” energy providers, Miliband added that “too much power is concentrated in too few hands” and could consequently have a detrimental impact on jobs and enterprise.
The Governor of the Bank of England, Mark Carney, has dismissed the benefits associated with reducing banks’ market share stating that the strategy “would not result in substantial improvement to competition”.
As politicians and committees quarrel over the future of British banking, MPs have today blasted banks for their failure to support businesses, arguing that despite the government’s attempts to boost lending through the Funding for Lending scheme, small and medium sized businesses are still struggling to access funding.
The Funding for Lending scheme was launched in 2012 by the Bank of England and HM Treasury, to help encourage banks and building societies to lend money to businesses, aimed at helping businesses gain access to much needed funding, hopefully allowing these businesses to thrive and ultimately contribute towards the recovery of the UK economy.
While December’s Christmas shopping trends proved fruitful for retail figures, with the fastest annual sales growth in more than nine years being recorded by the Office for National Statistics (ONS), and December’s sales were up 2.6% compared with November, there is still need for banks to support SME’s and smaller businesses to help fuel a strong economic recovery.
The banking industry has also faced criticism last week as consumer group Which? has called on banks to make it easier for consumers to compare the costs of running their current account with different banks. Research by the consumer group found that only six of 18 volunteers thought a typical consumer would be able to compare the charges.
Which? Executive Director Richard Lloyd commented:
“Consumers are faced with a myriad of complicated charges for using an unauthorised overdraft, and it’s virtually impossible for people to calculate and compare the cost of running a current account”
Research by Which? has once again flagged up failings within the banking industry, whose consumers continue to suffer as a result of their practices and greed. While Miliband’s proposals have been met with cynicism from select parties, it seems quite clear that the banking industry is in desperate need of an overhaul if we are to hope for a better future in banking.