In a Pointmaker for the Centre for Policy Studies, I argue that competition in the banking sector has been too weak for too long and must be strengthened.
A fundamental requirement of competitive markets is the possibility of 'free entry' for new players and 'free exit' for those that fail. The regulatory framework for financial services has left competition authorities in a junior role, and this has helped to create a banking sector dominated by banks that are too big to fail.
This has also led to high barriers to entry for new players and complacency about the need for greater banking competition, which has been too weak in the banking industry for some time. The top five banks have a market share of 80 per cent or more which has the effect of stifling competition.
Increasing competition in the banking sector is a huge priority for me, not least because it makes it easier for consumers to shop around and choose a bank that suits their needs.
You can read the full CPS paper here.