Donald Cruickshank, the former chairman of the London Stock Exchange, said new powers handed to the Bank of England to regulate banks will do little to improve competition.
Cruickshank said the central bank’s Prudential Regulation Authority and the Financial Conduct Authority won’t have competition as a primary objective and that will lead to inertia in promoting choice for consumers.
“If that authority does not have a competition objective, then it is very likely, in my view, that competition will be muted,” Cruickshank told a parliamentary hearing on banking standards in London today. “It’s easier for the regulator and regulated if competition is muted.”
Cruickshank, who wrote a government-commissioned report on the U.K.’s banking industry more than a decade ago, said his findings had been stifled by the Treasury. He said today said he is “gloomy” about new banks entering the U.K.
“It will be extraordinarily difficult for a new entrant to come into this market,” Cruickshank told lawmakers. “The promotion of competition is going to have to come from primary legislation.”
All regulatory functions should be taken away from the regulated, Cruickshank said in a written note to the commission. “The Libor scandal is just the tip of the iceberg here,” he wrote.