LONDON May 4 Britain's financial watchdog
warned banks they must start treating customers better by the
summer or face repercussions from UK and European regulators.
Martin Wheatley, managing director of the Financial Services
Authority (FSA), said banks were still not "fully engaged" in
providing top quality core services and were making it harder to
restore public trust after being bailed out by taxpayers.
"We wrote to all banks in January to encourage a more
proactive approach," Wheatley said in a speech on Thursday night
and available to the media on Friday.
HSBC, Barclays, Royal Bank of Scotland
and Lloyds dominate high street banking.
Customers still cannot access their money quickly because
banks are slow to ensure that payments reach an account by the
end of the following business day, Wheatley said.
It was also difficult to cancel regular payments, such as
"I cannot understand why something as straightforward and
helpful to the customer as this, is so hard to do," he said.
The UK Payments Council, an industry body, said the rule on
following day crediting of accounts came into force at the start
of January, but has been flagged for several years and is the
responsibility of individual banks to enforce.
Wheatley will head Britain's new Financial Conduct Authority
(FCA) as part of a supervisory shake-up in the first half of
next year when the FSA will be scrapped.
"We will publicise our findings and our expectations in the
summer and take any appropriate action with specific firms,"
Banks will face competition from non-banking operators and
the European Union is likely to propose legislation unless
lenders improve their service, he added.
The FSA and its successor, the FCA, will be far more willing
to crack down on bad products and end mis-selling scandals that
stretch back two decades or more.
Wheatley said banks have paid out 3 billion pounds so far
for mis-selling payment protection insurance (PPI) and the
watchdog is examining concerns raised by small businesses who
bought interest rate swaps from banks.
"If we find evidence of breaches of our rules or
mis-selling, we will take action," Wheatley said.
In future, the FCA will interview candidates for top conduct
jobs at financial firms, while the new Prudential Regulation
Authority at the Bank of England will interview candidates for
roles that manage a lender's capital buffers.
"We may have joint interviews for the chairman and chief
executive and we will try to communicate decisions together to
firms," Wheatley said.