Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 229 - 239)




  229. Would you like to introduce yourselves briefly?

  (Mr Goosse) My name is Etienne Goosse; I am Director of Corporate Affairs of Europay International and Europay International is actually the international organisation managing brands like MasterCard, Eurocheque, Maestro on behalf of the European banks. That is what I do.
  (Mr Hawkins) I am Mike Hawkins; I am Chairman of MasterCard/Europay UK, which is actually the members' organisation. I am from the Royal Bank of Scotland group but I am here in my capacity as Chairman of MasterCard/Europay UK.
  (Mr Tyson-Davies) I am Richard Tyson-Davies; I am Head of Public Affairs and public spokesman for the payments industry from the Association for Payment Clearing Services.
  (Mr Pearson) Chris Pearson; I am the Chief Executive of APACS.
  (Mr Sweeney) Tim Sweeney; Director General of the British Bankers' Association (BBA).

  230. You perhaps heard the previous evidence session. Are you satisfied with your response to Cruickshank?
  (Mr Sweeney) Of the banks in the round?

  231. Yes.
  (Mr Sweeney) The answer to that is broadly yes. The Cruickshank Report covered a huge amount of ground. There were some differences in some parts of the industry with some bits of the analysis and there were different views on some of the recommendations. One thing I do want to make clear, if I may, up front, is that I represent all the banks who operate in the UK, not just the big four. It includes the foreign owned banks as well as the domestic UK banks. Our retail banking group has about 60 members. Each of those 60 members will have a marketing strategy and an approach to retail marketing. Even amongst the big four, let alone when you begin to get to the smaller players, you will find very significant differences. It is very rarely possible in these areas for me to say that is the view of the industry as a whole. There were some parts of the industry which welcomed elements of the Cruickshank study as helping improve the competitiveness of the industry at large. Part of my remit from my members is to help them create an environment from which they can compete effectively. It is against that background that I say in general yes, the response of the industry has been reasonably positive.

  232. Presumably the big four were not very enthusiastic about the idea of making the situation more competitive. By definition they were not.
  (Mr Sweeney) Even talking of the big four is actually to confuse the issue, with respect. The only thing they share in common is the determination to take business from each other. They are extremely competitive and they do have differing attitudes, different opinions on some of these issues. Are they interested in a non-competitive market? Of course not, because it would hamper their ability to take business from others. You can argue over whether the market is too concentrated or not and what effect that has. That is a difficult subject for a trade association and is one more easily answered by Government and by the Office of Fair Trading. What is undoubtedly true is that the industry believes it competes and it intends to compete fiercely.

Mr Ruffley

  233. Could you just remind us of what the market share of the current account market was for the big four at the time Cruickshank was published?
  (Mr Sweeney) I am sorry I do not have the figures in front of me. I heard you ask the previous witnesses.

  234. You do not have the figures?
  (Mr Sweeney) No, not in front of me. I believe that 70 per cent is about right.

  235. What is it now 12 months on?
  (Mr Sweeney) Roughly the same, but I am afraid I do not have the answer in front of me.

  236. Would that lead you to deduce that the big four are more or less competitive than 12 months ago?
  (Mr Sweeney) I would not be misled by the numbers. In terms of intention I do not think the fact that there is a large segment of the market which is concentrated in a relatively small number of hands affects the determination of those players to compete; the point I made earlier.

  237. Why is that? If there has been no change in the market share in current accounts of the big four over 12 months, are you telling me that things have got better in terms of competitiveness?
  (Mr Sweeney) No.

  238. You are not saying that.
  (Mr Sweeney) No. Two points. The first point is that I have already said I do not have the precise figures in front of me, so I cannot confirm. I shall certainly send you the details. I do not have the figures in front of me so I cannot confirm there has been no change. What you have also to remember is that you are talking about very large numbers. Even relatively small changes, if there have been changes, will reflect some movement in the marketplace. Within the retail banking sector there are 100 million accounts in the marketplace and you do not need a very large percentage to shift a significant number of those accounts. There is another issue and I was struck by some of the answers that the previous witnesses were giving on the stickiness in the marketplace and the unwillingness of people to shift. I certainly think that there is an inefficiency in the marketplace in the sense that consumers in the banking industry do not always behave as consumers do in other markets and part of that is to do with perceived difficulties in transfer. Part of it is to do with the fact that although people quite often grumble about banks, as they grumble about all service providers, their grumbles are not actually sufficient to make them want to shift in the sense that you can very easily shift in other parts of the market from one supplier of washing machines to another supplier of washing machines.

  239. Why does it take more than ten days for a customer to move from one of the big four clearers to a rival bank? Why does it take ten days or more?
  (Mr Sweeney) I shall ask my colleague on my right to answer that because APACS are actually running the pilot project. One thing I can comment on is the Banking Code. There is an absolute determination within the wording of the Banking Code and within the Banking Code Standards Board to help the customer move. As the British Bankers' Association we publish guidance to people on how to move accounts and how to switch direct debits, so there is no lack of willingness at a strategic level within the industry to make this effective.

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