So last week we had Sir John Vickers and his Independent Commission on Banking (ICB) put out their interim report on how to clean up the UK banking sector post financial-crisis.
Rightly most of the media attention both before and since its release has been on the proposals to secure the structural health of the system.
But proposals to improve competition were also part of the ICB's remit and the report does include ideas.These are:
to force Lloyds, which currently has 30% of current accounts, to sell-off more branches than the 600 it already has to (additional number not specified);
Make switching bank accounts easier and more reliable;
Make sure the proposed Financial Conduct Authority has an explicit duty to promote competition.
And of course the elimination of the implied subsidy for the big banks of being ‘too big to fail' would enhance competition too, even though its motivated by making the system safer. The competition angle is of particular interest to us because the lack of competition in banking is something our members have noted.
Banks looking to break into the UK market or grow their share are often the ones that give growing manufacturers a break on a loan at the cut-off for the incumbents.
The more competitive and dynamic the banking sector the more it will support this growth-enhancing activity. So how do these proposals stack up?
The test of the Lloyds divestment will be how many potential entrants there are snapping at the heels of the big UK bank incumbents.
We know NBNK Investments was already eyeing Lloyds and admittedly much smaller Northern Rock assets up for a tilt at the UK retail banking market. Presumably an extension to the divestment encourages this even further.
And the Treasury Select Committee has this month noted interest from others already in financial services or indeed small scale banking including Metro Bank, Tesco, and Virgin Money.
But as the Committee also points out major effects on competition are likely to be slow in coming. These players are generally focusing on consumer banking with branch networks in the low 100s rather than 1000+.
So further interest would be good too, say from already established banks overseas that have ambitions to aggressively grow a share in the UK market. It might need to be a big boy to buy up 100s of branches from the divestment anyway.
It would be good to see new entrants push on SME banking rather than just the consumer side.
The switching thing needs some serious thought on the SME side, particularly with the interlocking interests banks will have in multiple products i.e. it's not as simple as changing over a current account. It's more daunting for SMEs to switch if it means renegotiating terms of loans and working capital facilities and the cost and stress that entails.
The vigilance of the Financial Conduct Authority sounds worthy – but no real detail yet about how it would enforce or promote this.