I echo those wishes of good will and merriment to the House.
Before I start talking about choice and competition in the banking sector, I would like to put on record my thanks to the Building Societies Association and the pressure group Compass for giving me assistance in preparing for this debate, and to the fantastic staff of the Treasury Committee, who have provided excellent briefings to me and other Members throughout our ongoing inquiry into choice and competition in the sector.
The financial crisis had a major impact on the shape of the banking sector. There has been widespread consolidation, and concerns have been raised that competition in the sector is not working-with, for example, investigations by the Office of Fair Trading into overdraft charges-and that there is now an ever greater lack of choice and diversity in financial services. That is borne out by the latest OFT figures on market concentration. In the personal current account market, the five largest providers in the country have a 73% market share. In the mortgage market, they make up over 75% of gross lending. They have cornered over 90% of the credit card market as well. By way of comparison, in Spain, the US and Germany, the five largest providers have less than 50% of the personal current account market. In all but a couple of cases, the largest providers are banks. There has been just one new start-up retail bank, Metro Bank, since 2008. These figures demonstrate that there is a lack of choice and diversity in the sector, which, of course, also reduces competition.
I believe we can increase choice and competition by growing and expanding the mutual sector. I hope the Government agree with me on that, particularly as a commitment was given in the coalition agreement to
"bring forward detailed proposals to foster diversity in financial services...and create a more competitive banking industry", in part by promoting mutuals.
But why mutuals, and what can they offer that standard banks cannot? First, mutuals are democratic. Banks are accountable to shareholders who demand a rising share price and a big dividend, whereas mutuals, collectively owned by their customers, have a collective of people who vote on the direction they wish the institution to take.