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By Simoney Girard | Published Aug 31, 2012

Gov’t responds to Treasury Budget report

In its response to the Treasury select committee’s report on the Budget earlier this year, the government confirmed that it was meeting and overcoming economic challenges facing the UK, in particular the lack of lending, funding for small to medium-sized enterprises and the lack of banking competition in the UK.

The government’s response to the TSC’s call to promote competition better, the government said: “The government is committed to promoting competition in banking and, earlier this year, accepted the recommendations of the Independent Commission on Banking.

“The recommendations included ensuring that banks will no longer receive a competitive advantage by being “too big to fail” and delivering a strong and effective challenger bank from the Lloyds divestiture to exert real, competitive pressure on the big banks.”

It claimed there was widespread support among government for the ICB’s recommendation that a new redirection service should be set up to make the process of switching current accounts easier.

The government response added: “We are holding the industry to account against their commitment to deliver this service by the deadline of September 2013. The government also welcomed the ICB recommendations on transparency. The FSA and the future Financial Conduct Authority and the Office of Fair Trading should continue to build on their work to improve transparency in the banking market.”

It said the government also agreed that the incoming FCA has a “key role to play in promoting effective competition in financial services markets”.

This is reflected in the FCA’s objectives, which now include an operational objective to promote effective competition in the interests of consumers.

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