The FSA reviews profitability and competition in banking industry
15/11/1999
In a lecture tonight to the London West End Centre of the Chartered Institute of Bankers, Howard Davies, the Chairman of the FSA, reviews the recent trends in UK banking, the influences on profitability and the potential impact of new competitors and new distribution systems.
Speaking at the lecture, Howard Davies said:
"In a competitive market high profits naturally attract new entrants and a striking feature of the British banking scene in the last couple of years or so has been the entry of new players: supermarket banks, banks started by insurers and so on.
The Internet lowers barriers to entry, including geographical barriers to entry: in particular it removes the need to build a branch network. So for an industry with high profitability and already attracting new entrants, the Internet may well speed up the process of profit erosion."
The lecture follows the Chancellors statement last week that the FSA will in future be required to report on the impact of regulation on competition.
Notes for editors
The Governments intention, as set out in the Financial Services and Markets Bill currently at the Committee stage in Parliament is that the FSA should be the single statutory regulator of financial services business.
A copy of the lecture can be found on this website http://www.fsa.gov.uk/speeches/1999/november/15111999.htm