Labour leader Ed Miliband has called for a “reform of the banking industry”. Image courtesy of rgbstock/constantin jurcut.
Following a week of heated exchanges in the House of Commons ignited by the rate-fixing scandal
, Labour leader Ed Miliband has called for a “reform of the banking industry” which includes forcing the "big five" banks Barclays, Lloyds, HSBC, RBS and Santander to sell up to 1000 branches.
Speaking at the Co-operative Bank in London today (July 9) – which is currently in discussions with Lloyds Banking Group to acquire a significant number of its branches – Miliband said "at least" two "challenger" banks should be set up to boost competition
and break the hold of the so-called “big five”.
He added: "Let's turn five into at least seven so there is proper choice for the consumer."
Greater competition between the banks could potentially result in more favourable rates for both consumers and UK businesses
The leader of the opposition went onto say that a code of conduct needed to be set up for bankers and outlined plans to create a specialist financial crime unit within the Serious Fraud Office
. He also argued that those found guilty of any wrongdoing should be "struck off".
Meanwhile, the Government has argued that is already in the process of reforming the banking system. Speaking on the BBC’s Andrew Marr Show (July 8), business secretary Vince Cable said: “I want to see more competition. It's a good idea and it's happening... we are creating a more competitive banking system."
Miliband’s speech comes on the day that the Bank of England
deputy governor Paul Tucker faces an inquisition from MPs on the Treasury select committee over discussions with Barclays regarding the main interbank lending rate known as the Libor.
The scandal has led to an intense debate about how a subsequent inquiry should be handled. Labour’s bid to launch a judge-led inquiry was rejected by 320 votes to 239, a Government majority of 81. Following this, Labour voted against the creation of a parliamentary committee to investigate the scandal. However, the Commons did back a parliamentary inquiry, carried out by a specially created committee of MPs and peers by 330 votes to 226, a majority of 104.