Examination of Witnesses (Questions 229
TUESDAY 16 JANUARY 2001
229. Would you like to introduce yourselves
(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
(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?
(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
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.
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
(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.