Start-up banks to be given extra support

Start-up banks to be given extra support

Start-up banks launching in the UK are to be given special support under plans by City watchdogs to boost competition in Britain's banking sector.

The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have set up a new team to help challenger banks in an effort to loosen the grip of the major high street players.

Banks can wait a year to be granted a banking licence, but the regulators hope to make the process easier and quicker for new lenders.

The unit will offer a dedicated helpline and email address giving access to staff at the PRA and FCA, not only throughout the process of getting a banking licence, but also in the early days after launch.

Andrew Bailey, deputy governor of the Bank of England and chief executive of the PRA, said: "The new bank start-up unit builds on the work we have already done to reduce the barriers to entry for prospective banks, which has led to 12 new banks now authorised since April 2013.

"These new banks are a key part of bringing innovation to the sector."

There have been a number of new lenders launching since the financial crisis, with Metro Bank entering the market in 2010, which at the time marked the first new retail bank in Britain for 150 years.

Some of the latest new entrants include online-only lenders Atom Bank and Tandem, which were given full licences last year.

The government wants to open up the banking sector, which is dominated by the big players - Barclays, Lloyds Banking Group, Royal Bank of Scotland, HSBC and Santander.

Tracey McDermott, acting chief executive of the FCA, said increasing competition is "important for consumers."

"The new unit will offer firms an accessible way to find the information they need to get themselves authorised," she said.

Harriett Baldwin, economic secretary to the treasury, added: "A key part of our long term plan is to boost competition in banking, driving the industry to offer the best possible products and services to customers".

"This unit will help to stimulate even more competition and diversity in Britain's banking sector," she said.