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HM Treasury News Release
187/99
9 November 1999
COMPETITION AND REGULATION IN FINANCIAL
SERVICES MARKETS
Don Cruickshank today welcomed the Government's response to his Banking
Review Team interim report, 'Competition and Regulation in Financial
Services: Striking the Right Balance', published on 22 July.
Commenting on Economic Secretary Melanie Johnson's announcement
of the Government response to recommendations in his interim report,
he said:
"I welcome the changes the Government proposes to make to the Bill
to ensure that markets in financial services are subject to effective
competition scrutiny, and that the right balance is struck between
the FSA's regulatory objectives and effective competition.
"I made six, quite detailed, recommendations in my Interim Report.
For five of them the Government's proposed changes to the Bill meet
the substance of my recommendations. In its proposals for external
scrutiny the Government has gone further, and proposed a reporting
procedure which will make the FSA's assessment of competition transparent.
"My sixth recommendation was that the FSA should be responsible for
making the trade off between regulatory and competition outcomes in
financial services. I proposed that this should be achieved by giving
the FSA a primary competition objective to minimise the anti-competitive
effects of its regulatory activity.
"The Government believes that this outcome can be achieved without
giving the FSA a primary competition objective in addition to its
regulatory objectives. My concern has always been that the outcome
should be as Ministers intend. I am not wedded to any particular means
of achieving this, and I will welcome any changes to the Bill which
deliver the outcome in practice."
"Work on the review of banking services is continuing and I look forward
to reporting to the Chancellor early next year."
NOTES TO EDITORS
Chancellor of the Exchequer, Gordon Brown, announced the setting
up of the banking review in his Pre-Budget report on 3 November 1998.
Its terms of reference are to:
*examine the banking sector in the UK, excluding investment banking;
*examine the levels of innovation, competition and efficiency in various
sub-markets, including SMEs;
*look at how these levels compare with international standards;
*consider whether there are options for change which the industry
or Government should consider.
The review is being undertaken by a team of Treasury officials under
Mr Cruickshank's direction, and calls on the advice of outside experts.
On 13 April 1999 Mr Cruickshank announced that electronic commerce
and money transmission issues would be added to the scope of the review,
in response to consultation.
The Banking Review Team's interim report, 'Competition and Regulation
in Financial Services: Striking the Right Balance', was published
on 22 July 1999. The interim report, the initial consultation document,
responses to it, and banking review press releases are available on
the Bank Review website at www.bankreview.org.uk.
Mr Cruickshank was Managing Director of the Virgin Group Plc (1984-89);
Chief Executive of the NHS in Scotland (1989-93); and Director-General
of OFTEL (1993-98). He is Chairman of the Government's Action 2000
Millennium Bug campaign and Chairman of Scottish Media Group plc.
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