Policy Research Media Morhamburn

Quite an interesting exchange between the Economy, Energy & Tourism Committee (who are undertaking an inquiry into the way forward for Scottish banking) and the OFT witnesses who were giving evidence; or at least it might have been.

The main point of contention was why, after raising particular concerns around three specific markets (current accounts, mortgages and SME banking) was the OFT not doing anything about it? (it had already been established via some robust questioning from Wendy Alexander that they were not, and had no plans to, undertake any investigations).

A fair question you might think. The problem is with a body like the OFT, as with many bodies who operate in the hyper-sensitive world between money-markets, major corporations and all of the commercially sensitive information that circulates between them is that they cant really say anything substantive.

They try to shed light on their decisions, but ultimately they could not provide exact figures for fear of revealing any privileged information; they couldn’t comment on any issues that they might in future end up investigating for fear of prejudicing their decisions; and they could not comment on anything that was not within their remit (which was unfortunately, most of the big decisions in this case).

And while they did reveal that they expect significant progress from banks towards addressing some of the concerns that they raised in their report by this time next year, they mentioned that they felt it was not really the time to be making assessments, as yet the ‘new normal’ had not emerged.

So while all the signs are that the recession is easing, comments like this confirm that the banking sector is still in a state of flux, and as it was this sector that dragged the economy into the recession, it is likely the full recovery will not begin in earnest until this sector begins to settle down.

All of which begs the question; is this inquiry taking place too soon?

 

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