Banks and Banking

Banks and banking are high on the political agenda. Since the financial crisis, banks have rarely been off the political agenda and, as the global economic conditions remain challenging, many businesses have encountered difficulties in securing funds. Reforms at virtually every level of banking are either in place or being considered. Across Europe, measures are being implemented to deal with the debt crisis and to achieve regulatory consistency within the Euro zone.

Here at home, Parliament debated the Financial Services (Banking Reform) Bill. This legislation includes provision to ring fence banking activities in order to protect retail banking from exposure to the risks of investment banking. The Bill is based on the Vickers Commission on Banking - established by the Government to consider the options following the collapse of several banks. This follows several changes in regulatory bodies, notably the strengthening of the Bank of England.

The Government has also created the Green Investment Bank in order to stimulate investment in this growing sector. It is based in Edinburgh, has some £3 billion available as a fund and recruited a range of experts in the green economy. A similar Business Bank is also being formed. These initiatives are designed to augment the banking sector with new models of investment.

One theme is the introduction of more competition between banks and, crucially, the ability of new banks to enter the market. In the past, the traditional high street banks have dominated, especially with small and medium sized enterprises (SME). These banks have become too remote from the customer, inflexible because of their hierarchical structure, obsessed with 'products', and prone to squeezing SMEs as they seek to reduce their own risk exposure. We need a culture change in banking and the scene is being set for this to happen.

More locally, I attended the Annual General Meeting of the Stroud Valleys Credit Union. This is a properly regulated community bank and is helping many people through lending money and providing saving accounts. It is a growing bank and about to move into new offices in Brunel Mall off London Road, Stroud.

If you are interested in the issues raised above, please contact me on 01453 751572 or visit my website - www.neilcarmichael.co.uk. Now, you can also follow me on twitter @neil_mp.