The APPG on Challenger Banks and Building Societies has called on the incoming government to “break the chains of excessive regulation”, which it says disproportionately impacts challenger institutions.

The cross-party group today published a report on the role financial services can play in supporting the government’s ‘levelling-up agenda’.

It recommends using the current Financial Services Bill in Parliament to break what it describes as restrictive regulatory practices.

The report says that regulatory intransigence is holding back challenger institutions and “stifling competition”.

“…major High Street Banks remain insulated from the forces of competition and an obsession with preventing failure among regulators has made it impossible for challenger institutions to complete with the major banks on a level playing field,” claims the report.

“Levelling-up must move beyond merely being a slogan, especially given the current tough economic climate,” said chief executive of Metro Bank, Dan Frumkin. “If done right, channelling fresh investment, finance and opportunity will change the fortunes of whole communities.

“Challenger banks and building societies, including community banks like Metro Bank, stand ready to play a significant role in this – yet our potential continues to be held back because rules and regulations aimed at de-risking the UK’s biggest banks actually prevent challengers from growing and shaking up banking for the better. I hope that this report kick-starts debate on improving these rules and opening the path to growth.”

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