Wednesday, 17 February 2010

Banks To Raise Prices By 33%?

JP Morgan concludes that banks must raise the prices of all their retail, commercial and investment services by 33% to cover the cost of regulation, if they are to meet current profit forecasts.

The readiness to advance this conclusion highlights the critical lack of competition across the banking sector. Ironically this is a product of the current regulatory framework. Currently, financial regulation funnels investment opportunities and funds into a zone where  relatively few firms are permitted to operate, enabling them to charge excessive fees. In other words, regulation designed to protect the consumer is actually underwriting "fat banking".

The cabal will only be broken up by opening the financial markets to everyone. The clear objective of the financial regulatory regime should be to deliver simple, low cost financial products that are accessible to us all.  Regulators should foster the growth of low cost 'facilitators' in the commercial and investment banking markets, to unleash the same trend that has enabled us to unbundle travel packages, music albums and personal loans to create our own personalised, lower cost alternatives.

The cartoon appears here.
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