In my role as an MP, I am involved in several All-Party Parliamentary Groups (APPGs). APPGs provide an opportunity for parliamentarians from different parties to work together and focus on a particular issue. I chair the APPG for Challenger Banks and Building Societies, which reviews financial sector regulation to promote fair competition and to encourage diversity of service for customers.
Although technical and jargon-heavy, this subject matters. Challenger banks are start-up financial institutions that compete with existing banks by offering better services. However, the same big four banking institutions have dominated the UK market for the last 100 years. It cannot be right that the same institutions which powered the industrial revolution are the best to take us forward in the digital age.
In an appropriately regulated and competitive market, the institutions that best cater for the needs of customers will succeed. Rather than large multinationals, local institutions, such as Leek United Building Society, are often better placed to serve the needs of their area. However, the lack of effective competition in the UK banking sector aids the multinationals and disadvantages the challengers.
It was therefore great to host the APPG’s annual reception last week, where the Deputy Governor of the Bank of England, Sam Woods, and the Economic Secretary to the Treasury, John Glen MP, reaffirmed that this issue is a focus of theirs. The event served to launch the APPG’s latest report, which revealed the findings of our second survey into the impact of COVID-19 on the sector. It was also an opportunity to reflect on the challenges of the past couple of years and to meet the sector’s leaders. I was struck by the optimism that people had for the opportunities there are for challengers to have a positive impact as our economy recovers from COVID-19.