Utilities

UK banks perform several tasks in the UK economy. But according to this article even if they are public utilities, authorities need to control and regulate them. Find out why.

Banks have economic features similar to those of utility service providers – which are typically regulated more heavily than other companies – writes Phil Molyneux. He explains how banks ought to be regulated with this point in mind, and concludes that greater regulatory oversight of bank pricing and service provision is necessary.

It has been nearly a decade since the global financial crisis rocked the banking world, collapsing major banks, resulting in massive taxpayer bailouts. Since then UK banking has been impacted by a variety of other shocks including fallout payment protection insurance (PPI) mis-selling and Libor, and other rate fixing scandals. Put short, it has been a litany of disaster.

Problems in UK banking

Post global financial crisis, the UK economy has been slow to grow despite accommodative monetary policy (low interest rates and quantitative easing). Banks have also been hit by a host of regulations aimed at de-risking their business and improving overall soundness and governance. This has added to costs and dragged down profits. Royal Bank of Scotland remains 71% owned by the taxpayer, while in May 2017 it was announced that the last government’s holdings in Lloyds had been sold to the private sector