The Federation of Small Businesses (FSB) fully welcomes the recommendations set out by the Independent Commission on Banking (ICB) on reform of the banking sector, but believes that the recommendations should be in place before the end of this Parliament.
In a poll of FSB members, nine in 10 (89%) believe that the banking system needs reform with 52 per cent calling for implementation to happen immediately and 45 per cent before end of the current Parliament.
With UK banks holding 85 per cent of the business banking market, the FSB welcomes proposals to open up competition in the sector as seven in 10 (70%) respondents believe that improving competition would be a key way to reform the sector. The proposal to create a new bank from the branches from the Lloyds divestiture will open up competition in the long-run and help to put an end to the monopoly of the main banks.
Ringfencing will help to make the structure safer and will protect day-to-day operations. We hope that this will open up competition as the banks have to look to lending money and attract new customers as the way to make money. It will also level the playing field that new and existing banks play from.
John Walker, National Chairman, Federation of Small Businesses, said:
“The recommendations laid out in the report have the potential to make the sector safer and more secure. The Government must not water down the proposals and we urge the Chancellor to ensure that they are fully implemented before the end of this Parliament.
“Each of the main political parties has promised some kind of banking reform and it is what people expect to see. With 89 per cent of small businesses believing that the way the sector works needs to change, it is now imperative that the Government makes this happen.”
Notes to Editors:
The FSB is the UK's leading business organisation with more than 200,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk
The FSB’s reaction above is an immediate response to the Independent Commission on Banking’s final report. Detailed examination of the report will be required before changes affecting small businesses can be fully evaluated.
The poll is based on 179 responses to a snap poll sent out to a random sample of FSB members between 6 and 7 September 2011.
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