The government of the United Kingdom has been urged to utilise Brexit to cut red tape for small banks in order to stimulate competition and follow the deregulatory path that is set by the United States of America.
Paul Lynam is the influential boss of SecureTrust Bank, a challenger bank. He informed The Daily Telegraph that withdrawing from the European Union would enable the United Kingdom to level the field for smaller lenders and help in breaking the dominance of the big five – Lloyds, Barclays, HSBC, Santander, and RBS.
Despite a push by the government of the United Kingdom to boost competition during recent years, the big five still possess the lion’s share of the business and consumer banking markets, with switching rates actually dropping in 2017.
In the United States, legislators are currently pursuing a deregulation bill that is targeted at boosting small banks via Capitol Hill – and Lynam said that the United Kingdom should make use of Brexit to their advantage to follow suit.
Lynam, is also the head of the challenger bank panel for UK Finance, a City lobby group. He said that regulators in the European Union were too strict on small banks.
Lenders in the United Kingdom are currently required to answer to both the European Banking Authority (EBA) and domestic regulators. The EBA demands that all banks abide by the same international ‘Basel’ rules for holding huge capital buffers to protect them from failure incase of a crash.
However, Lynam said that this “one size fits” approach is not appropriate and is costly for smaller lenders, which he said should be permitted to fail.