New British financial watchdog to open bank payments to competition
By Huw Jones
LONDON (Reuters) - Britain's newest regulator set out on Thursday how it will wrest strategic direction of the 75 trillion pound payments sector from its big bank owners to spur competition.
The payments system forms the vital plumbing that allowed people and companies to make 21 billion transactions in 2013 via online banking, cheques and cash machines.
Policymakers argue that ownership of the system by a few banks such as HSBC, Lloyds, RBS and Barclays reinforces those lenders' dominance, making it harder for the recent flurry of new entrants such as Virgin Money and Metro Bank to build their presence.
The Payment Systems Regulator (PSR) said it would take control of strategy development and launch a review of ownership and competitiveness by April 2015, when it formally assumes its regulatory powers.
"Ownership, control and governance of payment systems will be opened up to give all service users a voice when decisions are made, not just those that own the systems, typically the major banks," the PSR said in a statement.
It will also review indirect access, or how new banks go through one of the systems' owners. "Competition is limited, decision-making opaque, and this is stifling innovation. This has to change," PSR Managing Director Hannah Nixon said.
The regulator, which operates under the umbrella of the Financial Conduct Authority, will have the power to carry out enforcement investigations, issue penalties and compel banks to take remedial action.
It will handle commercial disputes regarding access to payment systems or fees and charges relating to services provided by them. It will also have the power to force a bank to sell its interests in an operator.
New entrants want so-called portability, meaning customers keep their account number when they move to another lender.
"I don’t understand why, in the modern world, where we have one mobile phone number for all of our lives, why we can’t have one bank account number ... for all of our lives," Virgin Money chief Jayne-Anne Gadhia said on Thursday as the bank made its stock market debut.
(Additional reporting by Matt Scuffham Editing by David Holmes)
