Government must not ‘water down’ banking reform, says FSB

THE national chairman of the Federation of Small Businesses (FSB), John Walker, has written an open letter to the Prime Minister urging him not to ‘water down’ proposals on banking reform, due be released next week.

In the letter, Mr Walker urges the Prime Minister not to prejudge the findings of next week’s publication of the Independent Commission on Banking (ICB) report and not to make decisions based solely on the views of a small, albeit highly influential group.

Amir Butt, Peterborough branch vice chairman of the Federation of Small Businesses, said, “Having commissioned a report into the banking sector, it is very disappointing that the government is now looking to water down the findings before the ICB has even reported. The government courted businesses with promises of reform and it is time that they stood by those promises. Without urgent and radical reform the banking system will never change and those businesses needed to help pull the recovery onto firmer ground will be left to struggle.”

The ICB report was commissioned by the government to honour a pledge in the Conservative Party General Election Manifesto in which it said it would ‘reform the regulation and structure of the banking system’.

In recent weeks the banking lobby has predictably claimed proposals would have a detrimental effect on the economy. However, as the letter points out, a recent survey has found that 71 per cent of influential City figures believe that it would be a bad idea if the government took no action.

Furthermore, Mr Walker questions how the most recent debate – led by the banks – has omitted to talk about the issue of competition. The FSB has called for more competition in the sector for many years and believes that the Financial Conduct Authority should be given powers to promote competition to ensure that small businesses are given a fair deal.