Eyebrows raised as less than half of banks to get RBS bailout cash are challengers

Anne Boden

Banking Competition Remedies Ltd (BCR) announced the results of the Incentivised Switching Scheme (ISS) application process this week following an application process that has been criticised by challenger banks who have complained that the Government has set the bar for applications too low, enabling bigger banks such as Santander, Clydesdale and TSB to be eligible for a fund touted as having the aim of increasing competition on the high street.

The concerns appear to have been well founded after the release of the identity of the 11 organisations who have met the eligibility criteria for a share of the funds as only four are newcomers to the banking scene - Monzo, Starling, Metro Bank and Hampden & Co.

Arbuthnot Latham & Co, Co-operative Bank, Nationwide Building Society, and Svenska Handelsbanken, were named alongside other household names, Santander, Clydesdale and TSB on the incumbent list.

Anne Boden, chief executive of Starling Bank, said: “Today’s announcement is an important step towards bringing much needed competition and innovation to the business banking market - an area that has for too long been underserved by incumbent banks. 

“It is vital that the RBS fund delivers on its objective to introduce new competition into our stagnant business banking market and that means backing genuine disrupters.” 

The board of the Banking Competition Remedies said nine of the organisations have offers which are, in principle, due for publication on 25 February 2019. A further two organisations also meet all eligibility criteria and it is anticipated that they will launch or provide definitive offers in 2019.

Please refer to the footnote for the full list of eligible applicants. Four organisations were not, at the time of application, live members of the Current Account Switch Service (“CASS”), which was one of a number of pre-set entry conditions agreed between Her Majesty’s Government and the European Commission.

All four are confident their membership of CASS will be fully operational early in 2019, the BRC said.

A dedicated website will go live to place the organisations’ offers in front of former Williams and Glyn’s SME customers at the end of February 2019.

BCR chairman Godfrey Cromwell said: “It’s very good news that a broad selection of organisations have stepped forward and made a diversity of offers right across the SME client-base. Today’s announcement marks an important milestone for Incentivised Switching.”

BCR said it will now engage with the organisations with reviewed offers in order to progress contracting and verification of operational readiness.

The BCR said it is also considering a second application window in late Spring 2019, of which more information will be issued in the New Year.

Godfrey Cromwell added “Customers will be the real decision-makers here. We look forward to getting through the contracting stage and seeing these offers made public so that customers can react. We anticipate that a further application round in Q2 2019 will widen the range of offers still further.”