Examination of Witness (Question Numbers
1-31)
Mr Adam Phillips
18 November 2010
Q1 Chair: Mr Phillips,
I'd like to carry straight on from our previous session, touching
on some of the points that you raised, or began to get into, in
response to earlier questions. In your submission you said that,
"Structural change", that is structural change to regulation,
"could be a stimulus for greater competition". Can you
tell us what this structural change is?
Mr Phillips: Yes.
The FSA has had a number of objectives: financial capability,
consumer protection and the protection of confidence in the financial
system. Its concern with consumer protection, in my view, has
not been at the level that it should be. One of the most interesting
things to me was that of the three managing directors of the FSA,
until quite recently, one was responsible for supervision, one
was responsible for risk and one was responsible for everything
else. Consumer protection was a subset of risk. In other words,
one of their three major objectives did not have a managing director
who was responsible for it. I believe that has led to a situation
where they have not thought—until quite recently—enough
about the role of a regulator in providing effective consumer
protection.
Since the beginning of last year they have focused
much more on being an outcomes regulator. They've looked at their
effectiveness. They have moved into this area called "conduct
risk supervision", which is about beginning to think about
consumer protection, and I think they're making good progress.
But for that progress to be maintained I think it's important
that the governance body focuses primarily on their consumer protection
objective.
Q2 Chair: At the
end of the last parliament, the Minister responsible for this
in the Treasury said, in Committee in the House, that he thought
competition should be elevated to an objective of the FSA. Do
you think it should?
Mr Phillips: In
our original submission to you, which we put in about six weeks
ago, we said we did believe that. I know we've done more work
now and our view is it should be a secondary objective, not the
primary objective. The primary objective has to be—we phrase
it more broadly than consumer protection—let's say, for
the purposes of this, consumer protection. The reason for that
is that in some areas of the market it is hard to see how competition
can be made effective without significant regulatory intervention,
and I pointed out the role of a benchmark product in the pensions
market, for example. I think in retail banking there is a real
question mark about whether the new entrants will, in fact, be
able to change the shape of the market without significant intervention
by the regulator, for example to make it easier to switch accounts.
Chair: Let us come on
to this in a moment because a number of us are going to be asking
exactly these questions.
Q3 John Mann: You
state there are barriers to entry to the retail banking sector,
you don't tell us what they are. Would you like to?
Mr Phillips: Yes,
surely. If you are a major bank one of the great advantages is
that you have a large branch network. People need access to branches
of banks at various times. You can do a lot on the internet but
essentially it's quite important to be able to get to see someone,
just occasionally, especially if you've ever tried to get through
on the phone. So the big banks do have an advantage in that they
have those networks. That is the first problem. It is a problem
which, for example, Tesco doesn't face because it has the branches,
but for any other new entrants there might be an issue.
You can see that in the work that the OFT did on
switching a few years ago, where switching of bank accounts with
banks with less market share, was much higher than banks with
a higher market share. The reason is that the banks with less
than 15% market share tend to be on the internet, they tend to
be offering good savings products and people will therefore switch
for the best rates. But when it comes to where they do their transactional
banking, it's about the accessibility of the branch. It's very
expensive to move and difficult to move your account if you have
lots of standing orders. The banks make it very difficult for
you to do that. Those banks with big shares tend to hold their
customers. I think that is one of the issues about barriers to
entry.
Another issue about barriers to entry is that holding
the database of how your customers spend their money, how much
free money they have, is a very useful asset. I happened to have
a bit of money in my account this year, because I have two children
getting married and I was going to give them wedding presents
and pay for the weddings, and my bank manager, who I have not
heard from for about a decade, rang me up and said, "I see
you have a lot of money in your account, I wonder if we can help
you?" I said, "The reason is because my children are
getting married", and he said, "Well, in that case,
perhaps you'll need to borrow some money. Perhaps they want a
mortgage". So owning that database provides an opportunity
to sell, and that's also a barrier to a new entrant who will not
be able to do that.
Q4 John Mann: I understand
that, but what can be done about those two?
Mr Phillips: I
hope the Banking Commission is going to look at this—they
are doing a much more systematic piece of work than we are, I
have to say—but I think that we need to look at this issue
of transactional banking, of the utility nature of banking, and
the fact that most people are not aware what their bank account
is costing them.
Again, the work the OFT did demonstrate that
foregone interest on accounts in 2006 was to the order of about
£180 per account. They were unaware that that was the money
they could have got in interest. Equally, they're unaware of the
cost of providing that account. Only if they fail to do something—
John Mann: But those are
separate issues from the two barriers you raised. You raised data
and the number of branches. How should those two be addressed?
Mr Phillips: I
think the data issue is almost impossible to address. I think
you have to make it possible for new entrants to get into the
market and accept that they will then compete on their own terms.
Although it's interesting that, if you make the transactional
service one where people can transfer—as we do with mobile
phones—to somebody who is offering a better service, so
it becomes easier to move your account, it may well be that we
can change that behaviour. An example of that I would give is
that, talking to one of the new entrants, he said that his bank
opens a new account within 15 minutes. If you want to transfer
your account it takes a month because of all the standing orders
and direct debit payments, and they are very efficient. That transfer
is extremely difficult to make. So for a customer who wants to
move their account it's quite hard work to do so and, therefore,
banks benefit.
Q5 John Mann: I understand
that, but you raised branches as one of the issues. What can be
done about that?
Mr Phillips: I
don't think anything can be done about branches. As I say, a new
entrant who is offering their services through an organisation
that has existing branches, like a major retailer, will have the
ability to be available on the ground. It's very good that Tesco
is coming in. I think they have that possibility. If you look
at Metrobank, they're expecting to take between now and 2020 to
get to 200 branches in the south-east and they think that's a
very aggressive plan. The only other thing that could be done
would be to look at a break-up of some of the major retail banks.
As I say, we're not in a position to do that work. I hope the
Banking Commission will have a look at that.
Q6 John Mann: Compared
to other sectors in the UK economy, where would you place banking
in terms of competition and competitiveness?
Mr Phillips: Some
aspects of banking are very competitive. The issue for me is whether
the competition is effective in delivering value to the customer.
They may find it difficult to make a profit, but that's not quite
the same as meeting the customers' needs and providing a value
that people appreciate. As an example—you will be talking
to others about this—the anecdotal evidence is that people
don't switch their account because they don't think they're going
to get better service from another bank. That suggests that there
is a real problem here about effective competition.
Q7 John Mann: You
talk about poor outcomes in your submission. Can you evidence
which group of consumers have suffered most from poor outcomes?
Mr Phillips: I
think that in the recent past, the people who have suffered most
have been the people who have been in debt and who have found
themselves missing a payment. For no reason their pay might go
in a little late or they may have a standing order they may have
forgotten. It has pushed them over the edge. They immediately
have a significant bank charge, then they have a letter telling
them they have a significant bank charge and so they have already
spent nearly £100 before they can put it right. There is
a lot of evidence that people who, once that begins to happen
to them, find it extremely difficult to get back to a situation
where they're in credit. The work that the Financial Inclusion
Taskforce undertook demonstrated that the majority of people who
don't have bank accounts have previously had bank accounts, but
don't choose to have them now because they feel that they're a
trap. So I think that is the real issue.
Q8 John Mann: Finally,
ideally, for the best competition, how many more banks and how
many more building societies would we have operating in the UK
economy? What is your best guess on that?
Mr Phillips: In
the UK we have six major banks who dominate the market. Most of
the building societies have quite small shares; they're in this
below 15% level. Assuming that we do not forcibly break up some
of the banks, which is a possibility, the only other route is
to make sure that there are no major financial barriers to the
new entrants—
John Mann: Ideally, how
many more would we have to maximise competition?
Mr Phillips: I
think we have enough already. The issue there is that the market
is very skewed towards a small number of large banks. So there
is competition at that lower end of the market share, but at the
top end it is what I would describe as resembling an oligopoly.
They work together to have prices that are very similar, and deliver
service that is very similar, and therefore the consumer has no
choice.
Chair: That's a very serious
observation, and I bring in Stewart Hosie at this point.
Q9 Stewart Hosie:
That is twice now you've spoken about oligarchic banking, and
your submission highlighted specific problems in Scotland and
Northern Ireland. Do you believe there are regional monopolies
or regional duopolies there?
Mr Phillips: I
have no evidence of that. The point that we were making was that
in the UK you have six major banks. In Scotland and Northern Ireland
you have four major banks. However, in Scotland the share of the
two largest banks is enormous. So for many people there is no
real choice because they may have to go to one of those two large
banks, and when you get a situation like that there is a tendency
for the companies involved to be uncompetitive. I think that's
the best I could say.
Q10 Stewart Hosie:
Is that the only worst outcome from Scotland and Northern Ireland
being uncompetitive, or—
Mr Phillips: The
lack of competition means that it's expensive for the citizen
to get banking services, and the range of products that are made
available to them may be restricted. Those are the risks that
they run.
Q11 Stewart Hosie:
Let me ask this question in a different way. We hear that story
a lot in relation to SME lending. It's a huge issue that every
MP has. But in Scotland right now Lloyds have the disposal programme;
there is a possibility of the recreation of the TSB; Bank of Scotland
is operating as a stand-alone bank with high lending decisions
taken locally; RBS have the disposal programme; HSBC have employed
a chief executive in Scotland; Virgin Money at Tesco Bank is bringing
in a lot of jobs; and Clydesdale Bank's assault on the market
is very aggressive indeed. Is not much of the problem that the
SMEs in particular are too dependent on bank lending and there
is no access to other equity outwith the retail banks, and it
isn't really a competition issue at all?
Mr Phillips: You're
specifically looking at SMEs?
Stewart Hosie: In particular,
because that issue we get a lot.
Mr Phillips: Yes.
I think what I would say about company lending—and this
is not my special area—is that there is a general lack of
finance, at that sort of medium level of risk, available as a
whole. At the moment it is in extremely short supply. The situation
is unusual at the moment. We are not normally quite so short of
liquid funds, which can be lent to companies who want to borrow;
and, quite reasonably, the banks who are trying to de-risk their
balance sheet are much more willing to offer it to people, like
me—as I said—when I'm thinking possibly my children
might need a mortgage, than to me running my consultancy business,
where there is no chance they're going to lend it to me because
I do not have a solid asset, in the shape of a house, to put up
against it. So it's a slightly unusual situation at the moment.
It's not just about lack of competition. It's also about lack
of risk capital being available.
Q12 Mark Garnier:
I just wanted to follow up on John Mann's line of questioning
on barriers to entry, and just develop a couple of these themes.
The first one that I wanted to look at was the role of the regulator,
in terms of things like switching and in terms of setting up other
banks. You talked about the fact that if you want to switch account
it's going to take you up to a month, because of things like moving
standing orders across, and this kind of stuff. You also have
the slightly farcical money laundering rules that we have to comply
with, which frankly are pretty tedious. So the regulator is effectively
denying competition. That's the first part about it. The second
part is that I'm hearing anecdotal evidence that when anybody
wants to set up a bank it's taking them a year or two years to
get regulatory approval. This is also something which is holding
up competition. Do you think that's a fair criticism?
Mr Phillips: It's
worthwhile spending some time checking out the people who are
going to be running a bank. If it takes a year—two years
does sound like a long time—but if it takes a year that
may be a wise investment to make sure that these people know what
they're doing.
Q13 Mark Garnier:
It is quite an expensive lead-in time for that person who is trying
to—
Mr Phillips: The
real cost is in creating the branch network; is in putting in
the software systems; is in raising the capital. So I agree with
that, but I think my view would be—I don't know enough about
the detail of it—that a reasonable amount of time to inspect
the skills' ability and knowledge of the people who are going
to be doing that is a good thing to do. I'm sorry I forgot your
second question.
Mark Garnier: The second
point was to do with things like the money laundering reporting
rules—
Mr Phillips: There
are two things: you have rules and the application of the rules,
and we have consistently argued that the way the rules are being
applied is unnecessarily onerous. Although they are much lighter
than they were companies still—for reasons to do with staff
training and risk—tend to failsafe, so they tend in default
to do things that they don't necessarily have to do, and I think
that's unnecessary.
Q14 Mark Garnier:
I also wanted to pick up on your example of when your daughters
were getting married and you had some money coming into your bank.
This sort of data isn't just about banking; it's also about things
like IFAs, insurance companies, and all this kind of stuff. It
gives them a monumental advantage. If you were to talk to the
average IFA they are quite unhappy about the fact that a bank
will be undermining them because they know exactly what your habits
are.
Mr Phillips: There
is an issue here—which, again, I hope the Banking Commission
will think about—which is that if you think of the English
pub about 25 years ago, you could have any beer as long as it
was the beer the brewery made. So if you wanted a pint of bitter
and you wanted Bass, you went to a Bass pub. If you wanted Pils
you went to a Watney pub, because they were the only people who
sold it. If you wanted both, you had to walk up and down the street
and decide where you wanted to be. The separation of the retail
outlet from the provider had the effect that immediately the retailers
brought in the things that people wanted into their outlets.
I think if we look at the bank-assurers as being
highly integrated, the focus of the business is not purely on
the customer, it's on the business, which is an integrated business
of producing the product and selling the product. There is a real
issue that an effective retail bank is a bank that depends on
its customers, sees its customers as a long-term asset. With the
movement from defined benefit to defined contribution schemes
people are now looking for a different kind of product. They're
looking for a long-term relationship in the area of advice. So
there is a real opportunity for a change in the market where people
want a retailer.
Q15 Mark Garnier:
But are banks going to give this? I think this is an important
point. A bank is going to do two things: first of all, it's going
to sell its own product first; and secondly, it's going to sell
a product. If your bank manager had been really smart he might
have phoned you up and said, "I see you have"—I
don't know how much money you're spending on your daughter's wedding,
but let's say £5,000—
Mr Phillips: If
only.
Mark Garnier: The good
advice would have been possibly, "You have £5,000 on
your credit card. You need to pay this off first". But he's
unlikely to do that. He's more likely to say, "You need to
buy my bank's saving product". Or, "You need to buy
my bank's overdraft product and not pay down the credit card debt
on my bank's credit card product".
Mr Phillips: Because
he is looking at the product that the bank is trying to sell.
If he's looking at building the customer relationship, because
of the value of the customer, he might well tell you to pay down
your credit card debt, because he wants you to be a good customer.
Mark Garnier: But he hasn't
spoken to you in 10 years. The only reason he has phoned you up
in 10 years—
Mr Phillips: Is
because he's come up with a red flag on his computer; absolutely.
Mark Garnier: Which sounds
to me like incredibly bad banking.
Mr Phillips: That's
what we have.
Q16 Mark Garnier:
So how are we going to stop it?
Mr Phillips: It
comes back to the objectives of the managers. If you listen to
somebody from Tesco or Asda, they talk about, "Our business
depends on our customers. If our customers don't have a good experience
they don't come to our store, they go to the people down the road.
We need to stock the products they want. We need them to be able
to park in the car park. We need to be open when they want us.
We need to solve their problems and, if necessary, we replace
the product because we want to keep the relationship". None
of that happens in a major bank. What they want to do is move
the product they want to do. This is why the SMEs have a problem,
because they're not thinking about building the business in their
community. They're thinking about what their lending requirements
are and whether they want to suck in money or push it out again.
There is a lack of engagement with their customers.
Q17 Mark Garnier:
The American model is one where you have a lot of small banks
in towns, and this kind of stuff. You make a very important point
about the six major banks dominating the core branch network.
You simply cannot replicate that. But, one of the things that
major banks have lost is that local knowledge. In Kidderminster
you have the big banks, but they're referring back to some bloke
in Lombard Street in order to find out what they should or shouldn't
be doing. Do you not agree that one of the ways forward is that
the regulators should encourage the setting up of local banks
in districts or towns or counties, or whatever, which cater to
the people and the businesses within that local area?
Mr Phillips: That's
one way to solve the problem. We did some research on fairness,
which we published relatively recently, and one of the things
that people wanted was someone to talk to. There are situations
where you want to talk to somebody. If you talk to people who
have been in retail banking they will say that the demise of the
professional bank manager was a real problem; that dealing with
a call centre, having someone who doesn't know anything about
you except for what comes up on the computer creates real problems.
But this is to do with the removal of costs from the system because
there isn't any benefit in providing the additional service. That's
a very strange issue, and I think it comes from this lack of effective
competition. Somehow it seems very difficult for banks to provide
a better service and stay in business.
Q18 Chair: Can I
just take you back to what you said earlier. Did you say that
there was evidence of an oligopoly or oligarchic behaviour?
Mr Phillips: I
will be very careful about what I say, but what I said was—
Chair: That is why I'm
asking you to have another go.
Mr Phillips: —there
appears to be an effective monopoly operating, in the sense that
people need utilities—
Chair: The operation of
a monopoly is illegal.
Mr Phillips: Yes,
and it doesn't—
Q19 Chair: Have you
had a word with the OFT about this?
Mr Phillips: Yes,
I know. I am trying to find a way of explaining a behaviour that
appears to me to provide a very consistent and similar level of
service across all banks. All banks provide free banking services—
Chair: These things can
happen by a happy accident from the point of view of the bank,
but if there is any operation, if there is any design behind this—
Mr Phillips: I
have no evidence that there is any design behind it at all other
than that, in this industry, people tend to copy each other's
behaviour.
Chair: You have not had
a word with the OFT?
Mr Phillips: I
haven't had a word with the OFT.
Q20 Mr Love: My question
relates to what we've been discussing here, but in a sense it's
a matter of principle. Under the Financial Services and Markets
Act, the FSA had to have regard to competition. I wonder whether
we should consider that, in the future, the regulator should have
regard to diversity. By "diversity" I mean large and
small, regional rather than national. But, in my particular interest,
what I'm mainly focused on is mutual and co-operative structures,
as well as the more conventional financial services. Is there
any merit, from a consumer's point of view, to having that as
something that they should have regard to when they're overseeing
the marketplace?
Mr Phillips: It's
a very interesting suggestion, which we haven't thought about.
I think there could be considerable benefits in that, yes, just
as you put it to me. But as a panel we haven't thought about that.
But the requirement to maintain or endeavour to maintain diversity
in this area could be a very interesting requirement.
Q21 Mr Love: Let
me just act as devil's advocate. What would be the argument against
it? Whenever this has been raised before it is always suggested
that you don't want to place too many responsibilities of that
nature on to a regulator. Do you see that as something that would
cause you to have second thoughts about that?
Mr Phillips: I
don't think that would be a problem. I think the real issue is
that where you do have within an Act "have regard to",
it is essentially to draw the attention of the organisation to
things it needs to take account of. We've seen the FSA—who
has considerable powers in the area of competition—failing
to use those powers in the past. So, "having regard to"
draws their attention to it, but it doesn't mean that they have
to do it.
Q22 Mr Love: Can
I ask you about the interest rate margin? Where are we? Is it
at record levels?
Mr Phillips: It's
a very good spread at the moment; absolutely.
Mr Love: Is it at record
levels?
Mr Phillips:
I don't know whether it's at a record level but it's certainly
higher than I've ever seen it.
Q23 Mr Love: What
are you as an organisation doing to highlight that, because I
would assume that it's contrary to the benefit of consumers, and
what should we be thinking about? Sorry, does its being so high
reflect a lack of competition in the sector?
Mr Phillips: It
would have been better to ask my friend Ian Cornish what he thinks
about that, because he is chief executive of a building society.
I would hesitate to say that it is a lack of competition in that
respect, but it is quite clear that, historically, the spreads
are bigger than they have ever been and we would expect to see
them come down as interest rates begin to go up again. If they
don't come down, I think there has to be a real issue here.
Q24 Mr Love: Let
me put it to you another way: are the authorities turning a blind
eye to the need of the financial services sector to rebuild capital,
at the expense of benefit to the consumer?
Mr Phillips: I
don't know whether they are. It is the case that those spreads
are very high and I could not say any more than that, but it's
certainly a question you could ask Lord Turner when he comes before
you.
Q25 Chair: Isn't
part of the reason for the wide spreads the cost of borrowing
for banks caused by the shape of the u-curve? Or are the banks
making that up when they tell us that?
Mr Phillips: There
are a lot of older people who rely on their savings and they are
finding it very difficult to get any decent return on their savings.
To the extent that there is money coming into the system, you
would have thought that it would be possible to pay a higher interest
rate. So the exact mix of what is going on in the market—as
I say, this is not my area—but Lord Turner would be a good
man to ask.
Q26 Mr Mudie: Mr
Phillips, could I say I'm disappointed with your evidence, in
that you've given us 2½ pages on this; Which? have given
us 26½ and you have 7½ on the previous subject. Why
is it so short when it's dealing with a key subject for consumers?
Mr Phillips: I
think that we would—
Mr Mudie: In terms of
competition and choice in banking, do you think this is strong
enough for the Committee? Are you treating it less importantly
than it should be treated?
Mr Phillips: No,
I think what we were trying to do was raise the major issues for
you so that you were in a position to understand where we were
coming from. You have the opportunity to ask me questions, which
you have done, and to the extent that you want more information
we would be quite happy to provide it.
Q27 Mr Mudie: From
your organisation, I think you'd expect more and I'd welcome you
putting in more evidence. We have just started the inquiry, and
we're starting the inquiry speaking to consumer representatives.
It is an opportunity for you to put the problems on the table,
so that when we meet the bankers themselves we have spoken to
you in depth and you have had the opportunity to put everything
you need on the table, and I'm disappointed you haven't.
But one of the things you did put on the table—and
I'd like you to convince me of—was free banking. Why are
you so in favour of free banking? It's almost the one thing in
your paper that you pull out and it seems to me extraordinary.
Mr Phillips: The
problem with free banking is that it is notionally free, so it's
not actually free. The effect of that is to favour certain kinds
of people against others. To give an example, the provision of
basic bank accounts to people who need a basic bank account in
order to survive, costs banks money. They provide that "for
free". In fact, to the extent that those people—
Mr Mudie: Or they don't
provide it and that's another problem.
Mr Phillips: That's
right. So our view about this is that if we are going to have
an effective transactional market for provision of financial services
we are going to have to look very hard at this "free market"—the
free provision of banking—because there is a real risk that
banks will not provide that service. There is no formal agreement
by which people have a right of access to a basic bank account.
It is a voluntary agreement. There is a cost associated with it
and it is important that those costs are understood and are shared.
That could be a cost that the individual has to pay. It may well
be that if you're on benefits that that would be something that
would be taken account of. It would provide much more clarity
when it comes to people looking at the value of bundled bank accounts,
where they're getting a built-in insurance coming through or some
benefits, other benefits.
Q28 Mr Mudie: I hope—and
I would like you to persuade me—that by advocating this
you're not handing the banks another opportunity to put another
charge on, the front door charge. They have put enough non-transparent
charges on; everything we do, we are accounts. Why would this
be a guarantee that suddenly transparency would take place and
competition would take place? It just seems to me it would be
two things. There would be another charge straight up. It might
be the only charge you get put transparently to you. It might
be, if you're suggesting a competition takes part over that, that
it's a minor victory for consumers. But secondly, we are trying
to persuade people. We are trying to persuade the banks to give
them basic bank accounts, and we're trying to persuade people
to take them up. Tell me why it helps both matters? Isn't it just
handing the banker something they don't need, a blank cheque?
Mr Phillips: If
that is all we do, then that is exactly what it will do. The issue
here is that the reason we would be doing it would be to change
the banking sector and the way it works.
Q29 Mr Mudie: I accept
that. But that's what I'm saying about your evidence. Why didn't
you go into things that Which? go into—all the ways the
banks are fleecing their customers: with charges; there's no transparency;
there's not even knowledge; there's no argument; there's no discussion.
Mr Phillips: We
did submit evidence to the Which? banking commission, quite extensive
evidence, more extensive than we've submitted to you. Their report
is a very good report. There is no reason for us to duplicate
that work. We've referred to it in our evidence to you as being
a very good report. We've quoted from it. So I think at that level
we would say that we agree with virtually all of their conclusions,
and we've been quite clear about the ones that we think are most
important. The provision of free banking services is a very complicated
area, and we would be willing to come back with more evidence
in this very specific area.
Q30 Chair: That would
be extremely helpful. In your evidence you say, "Lack of
transparency about interest foregone on current accounts and the
difficulty of establishing the total cost of a current account
work against customers making a rational decision". I think
most people around this table would agree. You are in a uniquely
strong position to have done a bit of number crunching. Do you
have any idea how much you are paying for your account?
Mr Phillips: No.
Chair: Don't you think
it might be something to take a look at?
Mr Phillips: Yes.
When I say that, it's very hard to find out.
Q31 Jesse Norman:
Between free competition and outright collusion there is an interesting
intermediate area of price signalling between players, and you've
mentioned some of the behaviour of economic effects. Do you think
there might be some price signalling going on between the providers,
which would explain why many prices have seemed so high, both
in the wholesale and the retail markets?
Mr Phillips: Again,
I think where you get a market with a small number of players
the risk of that exists. I look across what the charges appear
to be; the behaviours are very similar.
Jesse Norman: So your
suspicion would be this is happening here?
Mr Phillips: What
I said before, I stand by, which is in this industry people copy
each other. So when somebody does something that seems to work,
people copy it. If you look at PPI, one of the big problems about
PPI was that once one organisation could see a lot of money could
be made from it other people copied that. I think in the future
one of the jobs of the regulator will be to stop that copying
happening.
Chair: That was extremely
helpful evidence you have given this morning. We are very grateful,
and you can sense our interest in this subject in our thirst for
more. Indeed, a number of us—I was a bit surprised for a
moment—are asking for a lot more written evidence, but we
certainly do need it.
Mr Phillips: I
have made some notes.
Chair: There are a number
of things on which it would be helpful if you could come back
to us.
Mr Phillips: I
have certainly made notes but if somebody could tell us exactly
what you want.
Chair: The clerks of the
Committee will be in touch in due course. Thank you very much
indeed. We're going to take a three minute break and then carry
on with the next session. Thank you very much.
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