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Challenger banks call on govt to scrap unfair EU legislation

  • 20/07/2016
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Challenger banks call on govt to scrap unfair EU legislation
Challenger banks have joined forces to urge the government and the Bank of England to scrap certain parts of EU legislation in order to create a level playing field in the banking industry.

Aldermore, Metro Bank, Secure Trust Bank, Shawbrook, OneSavings Bank, Hampden & Co Bankers and Charter Savings Bank wrote to Andrew Tyrie, MP, chairman of the Treasury Committee, a week after the EU referendum vote, calling for a more proportionate approach to the regulation of smaller banks.

Publishing the letter today, Tyrie said: “Brexit poses risks; it may also create opportunities. Current EU legislation could be placing smaller banks at a disadvantage. This is because it risks imposing a ‘one size fits all’ approach to banking regulation.

“The Bank of England and the government both now need to consider whether the opportunity afforded by Brexit could enable the development of a regulatory regime less prejudicial to small and challenger banks.”

In the letter, the challengers state the government and the Bank will have the freedom to choose which parts of EU legislation they wish to keep and which areas they may wish to reform. Specifically, the banks want to see the reformation of capital requirements.

They wrote: “This will help smaller banks and building societies compete more effectively and provide more credit to the economy which will be useful especially should the dominant incumbents reduce their lending appetite in a post-Brexit environment.”

The challenger banks feel the Competitions and Market Authority (CMA) has failed to address the root causes of ineffective competition caused by the different treatment of capital, funding and taxation.

It wants the government to step back from its objective to create more new banks which will face the same problems as the existing newly-established institutions and focus on an approach which harmonises the treatment of all banks and building societies and lenders irrespective of their size.

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