The news: The UK needs a “Big Bang” of financial services reform to promote banking sector competition and grow the fintech market, according to a parliamentary committee.
What’s being recommended? In a new report, Members of Parliament (MPs) from the All-Party Parliamentary Group on Challenger Banks and Building Societies urged the UK’s incoming government to take action to “drive levelling-up” in financial services. The group advised the government to:
Leveling-up or parliamentary fluff? Though big on buzzwords the MPs’ report does also provide some practical advice for relatively cheap changes that could improve the banking sector. Many of these changes are centered around deregulation that would make it easier for neobanks and fintechs to scale. In theory, this will improve competition and offer badly needed benefits to consumers currently facing a cost of living crisis.
The report’s plan to develop open banking in the country is light on detail but timely: Open banking users are projected to grow 72% this year to hit 10.7 million, per Insider Intelligence forecasts.
However despite their practicality, the committee’s recommendations may face resistance:
What’s next? The latest report offers some valuable insight into parliament's wish to promote neobanks, fintechs, and open banking, but the next British prime minister is under no obligation to follow any of its advice. Both of the remaining candidates vying for the office have promised bold policy decisions: Liz Truss has made remarks she may reconsider the Bank of England's independent decision-making on interest rates. But it’s still unclear whether either candidate would radically change financial services regulations.