By Mark Kleinman, City Editor
Members of a Government-commissioned probe of Britain's banking sector are pushing for the introduction of a radical new system that would enable customers to keep the same account details when they change banks.
I understand that the drive for full account portability is being led by Mark Garnier, an MP who sits on the Parliamentary Commission on Banking Standards (PCBS), and is being debated by the panel ahead of its final report next month.
The proposal would go far beyond the advent of a seven-day account-switching regime, which is due to come into effect later this year. That will guarantee customers that their account with a new bank will be operational within a week, a move that ministers believe will foment greater competition in the banking sector.
People close to the PCBS say "serious consideration" is being given to a recommendation for full account portability, despite banks' warnings that the cost would be punitive.
Mr Garnier is understood to have told banks during private discussions in recent weeks that he believes the more extreme measure, akin to the way consumers can keep their mobile phone numbers when they switch to another network provider, is necessary to make the industry work more effectively.
Insiders said on Wednesday that Britain's major banks had been lobbying against the principle of full account portability on the basis that it could cost somewhere between £10bn and £20bn.
The industry argues that the complexity of introducing entirely new IT and payment systems could be a recipe for disaster, with senior bankers pointing to the IT problems which have blighted recent deals such as the proposed sale by Royal Bank of Scotland to Santander UK, a transaction which collapsed last autumn.
The PCBS is thought to be unmoved by this argument, however, with some of its members arguing privately that full account portability would improve transparency within the monetary system, and make it easier to resolve failing banks by enabling customers to transfer to another lender on an overnight basis.
If the PCBS does recommend full portability, it will put enormous pressure on George Osborne, the Chancellor, to support it.
Andy Haldane, the Bank of England director for financial stability, told the Commission last year that a shared technology platform for all banks would improve competition. The Government is now consulting on measures to open up the payments system.
The Parliamentary Commission has already scored two significant victories, effectively forcing the former HBOS chief executive Sir James Crosby to relinquish his knighthood and hand back 30% of his vast pension pot.
The PCBS also recommended in its first report that the ring-fence between the retail and investment banking arms of Britain's major lenders should be "electrified" by giving regulators a reserve power to forcibly break them up if they abuse the new regime.
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