A consortium of 10 lenders is pushing for a trade body mega-merger in a bid to cut lobbying costs and reduce work being duplicated.
The lenders behind the plans are Lloyds Banking Group, HSBC, Barclays, Nationwide, Clydesdale Bank, Royal Bank of Scotland, Virgin Money, TSB, The Co-operative Bank and Santander.
The group launched a consultation on bringing together financial services associations at the start of the year. Former Ofcom chief executive Ed Richards has been commissioned to provide recommendations later this summer.
They argue many stakeholders participate in more than one trade body, estimating the financial services industry as a whole contributes more than £50m to the largest 10 associations.
According to figures put out by the group, 60 per cent of members of the UK Payments Council are also in the British Bankers’ Association, while 60 per cent of members of the UK Cards Association also participate in the Payments Council, and 80 per cent of Intermediary Mortgage Lenders Association members are also represented in the Council of Mortgage Lenders.
There are nine trade bodies that are in the crosshairs of these proposals. These are:
- Asset-based Finance Association
- British Bankers’ Association
- Council of Mortgage Lenders
- Finance and Leasing Association
- Intermediary Mortgage Lenders Association
- Wealth Management Association
- Payments Council
- UK Cards Association
Three options have been put forward: maintaining the current system but with better co-ordination; integrating the organisations along product lines or market sector; or creating a single trade association to represent retail banking, consumer finance, wealth and commercial banking.
Under the third model, the trade bodies would sit below a council responsible for co-ordinating activity. The lenders describe this as the model most likely to succeed in achieving more efficient and effective representation for the sector.
But several of the trade associations concerned are yet to be convinced.
Imla executive director Peter Williams says it remains unclear how the broader agenda for such a body would be set, and what its primary focuses would be.
He says: “The board members will be far removed from a lot of the problems that individual trade bodies are already working on. Issues would have to be able to slowly work their way up this chain from an amalgam of individual trade bodies to this super trade body board, for it to then decide if it can agree on a common stance to say something about.
“You have a horrible feeling the lowest common denominator will start to creep in.
“We will never know until we try of course, but there is a great danger that what you’ll end up getting is something very generalised and very bland that does nothing beyond some very big, broad issues, with the rest left unattended.”
Williams adds it remains unclear whether individual trade bodies would have to agree policy decisions within the super-structure, submitting stances to other firms for approval.
The financial services sector, and banks and investment groups in particular, are braced for increasingly aggressive regulation.
In his Mansion House speech last week, Bank of England governor Mark Carney criticised the City’s ethical standards.
He also called for there to be new criminal offences for rogue bankers with tougher prison sentences.
Williams says: “The question has become how does financial services in total defend its position, and can that be done through an amalgam of individual trade bodies?
“The argument that I think the lenders would put is that it can’t, and therefore you need some sort of super trade body to do that.” But he brands any hope such a body could bolster borrowers’ faith in financial markets as “an enormously bold and unlikely”.
The British Bankers’ Association did not respond to the consultation.
A spokesman for the BBA declined to comment. HSBC, Lloyds, Clydesdale, Barclays, Nationwide and RBS also declined to comment.
Asset-based finance association head of communications Matthew Davies says it is cautious about the creation of a super-body.
“Many industries would say this, but we do see ourselves as having a unique perspective on many things, so our concern with whatever comes is it would need to ensure a sufficiently federal structure to allow distinct voices to be heard,” he says.
Wealth Management Association head of communications Sheena Gillett says: “Our mission is to help our members to thrive and grow, so that they can serve the needs of their customers. As the voice of the industry we do not believe the interests of our members would be served by not having this dedicated support.
“We will be feeding these views back and will ensure that the strong ties we have with some trade associations continue.”