Banks back in the firing line
THE UK's big banks were today accused of operating a 'complex monopoly' by the author of a key report on the sector.
Donald Cruickshank, who carried out a Government-commissioned review five years ago, said he believed nothing had been done to boost competition among banks and that the sector's bumper profits should sound alarm bells.
The former chairman of the London Stock Exchange also accused senior Government officials of blocking his recommendations at the time of the report.
He told the Guardian: 'Sustained (and) very high profitability is an indication that they are operating in a complex monopoly and that on balance this is bad for the economy.'
His comments came in the middle of the banks' reporting season, in which the industry is expected to unveil its highest ever combined profits of £30bn. Barclays recently posted profits of £4.6bn and its rivals are due to report later this month.
Mr Cruickshank complained that it was difficult for new players to enter the sector, dismissing entrants such as Tesco since its banking licence is held by the Royal Bank of Scotland.
His review of competition in UK banking in 2000 attacked the banks for overcharging personal and small business customers by up to £5bn a year.
It spoke of the need for a culture change in the banking sector and of inefficiencies in payment systems - such as the long period of time it takes to process a cheque.
In a further article in the Financial Times today, Mr Cruickshank accused senior Treasury officials of blocking his recommendations amid fears it would delay a key financial Bill.
He said: 'They were trying to get the Financial Services and Markets Bill through Parliament and my intervention was very unwelcome indeed.'
He also said the Treasury was to blame for not implementing his suggested new payments regulator, Paycom.
The banking results season continues next week with full-year figures from Bradford & Bingley on Tuesday, Egg on Wednesday, RBS on Thursday and HSBC and Alliance & Leicester on Friday.
