The Bank of England is set to examine the Chancellor’s plans to impose a new tax on banks, admit concerns that it may actually reduce competition in the sector.
The tax, which was first announced in the July Budget, will see corporation tax rise by eight per cent for those banks who make profits of more than £25million.
But there are fears that the changes will affect challenger banks such as Metro and Secure Trust far more than the UK’s “Big Four.”
As a result, Andrew Bailey, a deputy governor of the Bank of England, will be asked to consider the impact of the new surcharge and if it will in fact serve to cement the position of Lloyds, RBS, HSBC and Barclays – the four firms who are seen to have something of a stranglehold over the industry.
Conservative MP Andrew Tyrie is among those who have argued that the implications of the tax needed to be given proper consideration.
He said: “Millions of consumers and small businesses have been getting a poor deal for decades because of inadequate competition and choice in banking.
“It is essential that the surcharge does not obstruct Parliament’s efforts over the last four years to increase competition in the banking sector. The [Treasury] committee will want an assurance from the Prudential Regulation Authority (PRA) that it has assessed its effect on competition in the retail sector.”
