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Financial Services Bill

It is important that we ensure that banks do not end up cross-subsidising the more affluent account holders by levying disguised high relative charges on the less well-off. However, I am not an advocate of a system of bank charges that will conceal the true cost from customers. I fear that providing people with a free bank account would have that effect and send completely the wrong message to account holders. If we believe in principle that people need to have free accounts—I am not advocating that, as I have not thought it through carefully enough—it would be better to offer to pay the cost of them directly. If we insist that people have accounts in order to receive benefits, the taxpayer should logically bear that cost, at least in principle. There may be many technical and other reasons why that cannot be done, but logically that should be the position. There is a further reason for going for transparency rather than regulation. Although I have not worked out how the banks will do it, I am confident that they will take advantage of any regulation, and the additional complexity that that imposes on a pricing system, to find other ways in which to levy disproportionate charges on their clients. Indeed, the current lack of transparency encourages the banks to produce misleading products. They are often called free banking or free credit products and they litter the letter boxes of millions of people, but they are not free and they carry stings in the tail. They give customers the misleading impression that all banks are the same and that it is therefore not worth moving banks. That is harmful in itself—it should be much easier to move accounts between banks. For all those reasons, we must move to greater transparency. Although I cannot support new clause 9 or new clause 15, I hope that the message that the debate sends will reach the regulators and that they will press harder to achieve transparency. I hope that if we are shortly sitting on the other side of the Chamber, we will return to what is really required to ensure that banking customers can find out how much they are being charged so that we can have some more competition in the banking market.