UK to streamline payments to boost bank competition

Huw Jones

LONDON, May 4 (Reuters) - Britain's multi-trillion pound

system for shuffling payments and cheques will be streamlined

under plans announced on Thursday to help newcomers compete more

easily with long established banks and improve services to

customers.

Britain is keen to increase competition in banking, a sector

dominated by the "Big Four" lenders - Lloyds, HSBC, Barclays and

RBS. Any new banks have to use existing payments systems,

largely set up by the big lenders, for a fee.

A group created by the Payment Systems Regulator (PSR) and

Bank of England recommended on Thursday that the three retail

payment systems, Bacs, Cheque and Credit Clearing Company, and

Faster Payments Scheme be consolidated under one roof.

That would mean new banks will only have to make one

application to use all the three systems, thereby speeding up

the process and cutting costs.

"The consolidation would be an important first step towards

a generational change in UK payments," PSR Managing Director,

Hannah Nixon, said in a statement.

"Consumers will also benefit from new entrants coming into

the market and offering users of payment services new,

innovative products."

Although only a recommendation, in practice the three

payments firms have little choice but to accept the proposal by

the regulator and the BoE.

The PSR has powers to force through changes.

"We welcome the report, and look forward to seeing its

recommendations taken forward in a way which promotes an orderly

and smooth transition," said David Bailey, the BoE's director

for financial market infrastructure.

It is expected that the consolidation will be substantially

completed by the end of 2017, the PSR said.

"While good progress has been made, support from across the

industry is vital and significant collaborative work still needs

to be done if the plan is to be delivered successfully and the

benefits of the consolidation unlocked," said Robert Stansbury,

who chairs the joint BoE, regulator, delivery group.

(Reporting by Huw Jones; Editing by Elaine Hardcastle)