| Britain in bid to curb banks’ power to set payment policy |
LONDON Britain took steps to reduce banks’ power to set policy for the payments system, which handles trillions of pounds and affects the daily lives of millions of people.
Financial services minister Mark Hoban said on Thursday he wanted a new body that would be directly supervised by market regulators, ending a system whereby banks, who own the payments networks, also decide policy. “We need a payments system that responds to the needs of customers and is not just run for the banks,” Hoban said.
The payments network, which handles cheques and debit and credit card payments, is run by the banks-funded Payments Council, a self-regulating body set up in 2007. It angered the public in 2009 by deciding to scrap cheques from 2018, offering no real alternative, the government said.
While that decision was later reversed, the outcry sparked calls for the Payments Council to be reformed to reflect consumer interests, and to be directly supervised. The government set out several options, including reform of the Payments Council, a step it said would not bring any increased regulatory oversight of payments policy.
The government now wants a new body, a Payments Strategy Board which would be funded by an industry levy and directly supervised by the new Financial Conduct Authority which itself will be launched formally early next year.
The Payments Council would be shorn of its central policymaking role.
The government said there were several reasons why the Payments Council has not been as successful as intended in developing new and existing services, such as allowing customers to make money transfers within hours rather than days. “The main reason is the Payments Council is dominated by the UK’s largest banks. This allows the largest banks to set the strategic direction for the Payments Council overriding alternate views or stakeholder interests,” the government said.
Payments Council chief executive Adrian Kamellard said it wanted a model that worked best for consumers, businesses, industry and the economy. “That is not an easy balance to strike,” he said.
The government is also taking action in other areas to boost competition in retail banking as well as crack down on the mis-selling of financial products to vulnerable customers.
Reuters
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