PRA approves banking licence for Charter Savings Bank in competition-enhancing move

What started up as a small, start-up lending enterprise has been awarded a banking licence from Threadneedle Street, supremacy as regulators seek to stimulate switching amongst consumers to the loosen the stranglehold the nationís biggest banks have on consumers at present.

Expected to be up and running by late March, Charter Savings Bank has pledged to provide customers with ìcompetitive interest rates and excellent, reliable serviceî.

Following in the footsteps of the largely popular Metro Bank – the first lending institution to receive a banking licence in 100 years – Charter Savings Bank becomes the third, launched by parent company Charter Court Financial Services (CCFS), will offer a range of products including market savings bonds, easy access & fixed-rate saving accounts.

However, Chartered Savings Bank will not have any branches, instead offering an innovative telephone-based service 7 days a week along with the option of conducting transactions online.

Such originality could be the answer to the conundrum faced by the Bank of England and the wider public as to how to stem the tide of customers flowing to the nationís largest banks, preventing savers from attaining the value they deserve.

This dissatisfaction of the British public is the theme that Chartered Savings Bank has centred its self-publicising spiel around, promising to put an end to the disenchantment savers feel with the banking sector through its quality of customer service and range of ground-breaking options.

The specifics of the telephone-based banking serviceís products have not yet been made public, other than the aforementioned products, however fixed-rate bonds, which are part of its selection, are the most popular on the market offering fantastic interest rates in excess of 3%.

In a statement, Chartered Savings Bank said: “Charter Savings Bank will represent a real alternative to traditional banks, bringing a straightforward, transparent savings solution for a discerning customer base which is currently struggling to achieve its financial goals.”

The Bank of England established its Prudential Regulation Authority (PRA) arm back in April 2013, and charged it with the comprehensive scrutiny of individual banks, ensuring the stability of Britainís financial structure. From last year the PRA was given dispensation to inject sorely needed competition into the banking sector, with political pressure directed toward this end as opposed to intensifying regulation.   

At present, the ëbig fourí banks ñ that is Barclays, Lloyds Banking Group, HSBC and RBS ñ hold over 77% of the current account market in the UK, a figure which has lessened somewhat trivially over the last year, despite measures undertaken by regulators such as reducing the amount of capital a lender needed to apply for a banking licence.

Challenger banks only increased their market share of the retail lending sector by 3% from 2010 to 2013, according to KPMG, and despite this being virtually double their previous share, it still represents a trifling amount. The PRA will hope that Chartered Savings Bank, and its co-challenger banks, can garner a large enough following to tangibly encourage switching the much maligned sector.

Paul Whitlock said: ìWe will bring competitive rates and excellent, reliable service to a customer base which has too often been taken for granted by high street banks. A significant number of savers are dissatisfied and feel unrewarded in todayís economic climate and we intend to provide new options that meet their needs.î

He added: ìItís high time, in what has become a listless market, that straightforwardness and robust rates are re-introduced to the market. Charter Savings Bank aims to do just that.î

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