Challenger banks angry with CMA proposals

Bosses at six of Britain’s challenger banks will meet with the competition regulator this week, angry at the recently-released proposals for the sector, it emerged on Monday.

Aldermore, Atom Bank, Metro Bank, STB, Tesco Bank and Virgin Money planned to meet with the Competition and Markets Authority on Tuesday.

It comes after the CMA published provisional findings of its probe into the banking industry in October.

The authority ruled out large structural changes, such as the breaking up of the big banks or forcing branch sales and rationalisation, saying they would not address the industry’s concerns.

They did, however, recommend a price comparison website.

Paul Lynam, STB chief executive, said in a letter that he was “astonished” by the way the CMA presented its findings, Sky News reported.

He said some of the ideas would favour the UK’s largest high street banks – which already dominate the personal banking market.

“The possible remedies proposed thus far can in no way be considered far-reaching or thorough, not least as there are no meaningful proposals to address the huge disadvantages suffered by small banks in terms of disproportionate capital, expensive funding, access to payments infrastructure and excessive regulation”, Lynam was reported as saying.

More than three in four current accounts are held with Barclays, HSBC, Lloyds and Royal Bank of Scotland – something of a sore statistic for the challenger banks.

They had previously voiced concerns that onerous capital rules have made it harder for investors to back them, limiting their growth – despite ministerial promises of a level playing field.

The CMA’s final findings and recommendations for the banking sector were due to be published in spring 2016.