Treasury select committee chairman Andrew Tyrie has warned of potential conflicts of interest as the Government looks to offload soverign debt and its high street banking stakes.
Speaking today at the British Bankers’ Association annual conference in London, Tyire announced that the first investigation of the new TSC will focus on competition issues in the banking sector.
He told delegates that one of his concerns was that the new independent banking commission would be lobbied hard by the Government looking to offload large amounts of sovereign debt.
He said: “In assessing the merits of the proposals of the banks to hold large amounts of sovereign debt to meet liquidity requirements, I trust the bank commission will be alert to lobbying from Government itself – it has to offload high levels of sovereign debt into the market, they have a vested interest.”
Tyrie also warned of potential Government conflicts of interest regarding the forthcoming sale of state-owned banking assets.
He said: “Governments have an interest in maximising the yield from these sales. But they also have a duty to maximise competition in the retail market.
“I very much hope that, in the trade-off between benefiting the consumer and reducing the deficit, the Government prioritises competition over yield. By forsaking some immediate fiscal gain the consumer, and the economy as a whole, can benefit.”
Tyrie said the competition investigation will assess the problems surrounding a lack of competition amongst UK banks as well as dispelling what Tyrie called “the myth of free banking”.
He said: “Lack of competition within financial services has been a long-standing concern of mine, pre-dating the recent financial crisis. Examining competition within the sector is now more crucial than ever. The complaints, some justified, simply don’t go away. A disturbing consequence of the financial crisis is an increased concentration in the UK retail financial market.
“Also, free banking is not free – the charges are levied, but are not visible to consumers. That won’t do. Banks have the right to charge for their services but they should do this in ways that enable consumers more easily to compare the charges they pay with those of other providers.”