Bankers in the U.K. are asking for government intervention in what they call a “farcical” program meant to help business banking after the program experienced a number of setbacks, including one bank returning half of its awarded money, according to a report by the Financial Times.
The Banking Competition Remedies (BCR) was set up by the government in the U.K. to give customers more choices in banking. It had a 775-million-pound ($987.7 million) purse to distribute from the Royal Bank of Scotland, which was a condition of it being bailed out in 2008. The move was meant to help banking competition.
Many have criticized the BCR, saying it isn’t transparent enough and it won’t take responsibility for how long it is taking to distribute the funds.
“The NAO [National Audit Office] should have a look,” one senior bank board member said. “It has been ill-judged, non-transparent, and a pretty good example of how not to do it.”
The BCR passed out 425 million pounds ($542.1 million) to help with banking investments, but last week, Metro Bank, which received the biggest reward, said it would give back 50 million pounds ($63.8 million) of the money as it cancels expansion plans and deals with an accounting scandal.
Nationwide Building Society got 50 million pounds and said things were moving “slower than expected.” Starling Bank has only lent 1 million pounds ($1.3 million) of a proposed 913 million pounds ($1.2 billion).
Another 350 million pounds ($446.3 million) was made available to let RBS business customers switch rival banks, but only 10 percent of customers had done so within 18 months.
Other executives are frustrated that the BCR does not give details on how it selects the entities that receive the money.
The treasury cannot review decisions by the BCR because it created the organization to be “entirely independent.”
In December 2018, 11 banks had been cleared to have access to the fund. They included Arbuthnot Latham, CYBG, The Co-operative Bank, Hampden & Co., Metro Bank, Monzo, Nationwide Building Society, Santander, Starling Bank, Handelsbanken and TSB.
In May, it was announced that Nationwide Building Society, Investec Bank and The Co-operative Bank secured a combined $103.3 million, with most of it — $64.6 million — going to Nationwide. Investec and The Co-operative Bank were both granted $19.4 million.