I rise to congratulate the Minister on the excellent introduction of an independent payments regulator. I am amazed that this absolute game changer has not received more press attention, because our banking system still, on today of all days, faces the threat of being undermined in the eyes of consumers by its appalling behaviour. Today, Lloyds bank has been fined £28 million for its appalling treatment of retail customers—that is the biggest fine for retail misconduct ever. I stress that the reason for that, as the investigations by the Treasury Committee and the Parliamentary Commission on Banking Standards showed, is a profound lack of competition in the UK banking sector. Even worse, we even have the last great remaining closed shop, because the Payments Council regulates the banks, yet the banks own the Payments Council, and the banks both clear through and own the payments infrastructure. So there is no incentive to innovate and no self-regulation, and there is a deliberate suppression of competition. What the Minister has done by introducing an independent payments regulator is open that can of worms. The regulator will be a real game changer for the competitive outlook in the UK in future, and I wish to explain why that is.
The proposal is for the payments regulator to look at access to the payments system. As we know, the big clearing banks access the payments system directly, but challenger banks such as Virgin Money, Metro Bank and Aldermore have to go through an agency clearer. If its systems break down, those banks cannot serve their customers. Not only that, but because these banks have to go through the clearer to access the payments system, they get charged up to 10 times or 20 times as much as the clearers have to pay for one payments transaction. It is an absolute closed shop and it is appalling.
The payments regulator’s first job will be to examine access to the payments infrastructure and to say to the big banks, “You have to give direct access to every player.” The big banks argue, “You can’t do that because we all mutually underwrite one another’s payments.” As with any other clearing system, however, it is perfectly possible to leave a deposit up front and then to be called for more margin should you be running out of money, so the reason given for not allowing other banks direct access to the payments system is a completely spurious one. That will be item No. 1, and dealing with it will, in itself, create a completely different playing field for all those who want to come into the banking sector.