Banks have told nine trade associations in Britain they should merge into a single body to strengthen lobbying in Europe and slash membership costs.
A working group of banks that includes HSBC, Barclays and Lloyds said in a consultation paper released on Friday (16 January) there are too many trade groups, leading to duplication of lobbying and a lack of strategic direction.
Most financial rules in the United Kingdom are set by the European Union, and the paper said several UK trade associations actively lobby policymakers in Brussels on similar issues.
“Many trade associations acknowledge that this lack of coordination undermines the strength of UK industry representation in Brussels,” the paper said.
Banks, which pay the bulk of membership fees for the nine trade associations now under scrutiny, want to trim costs wherever they can as they comply with more burdensome regulation aimed at avoiding a repeat of the 2007-09 financial crisis.
A single, federated trade association comprising an overall coordinating council would go a long way to effectively address current challenges, the paper said.
“It could help the industry rebuild trust amongst its customers,” the paper added.
This week, Reuters reported banking trade groups including the British Bankers’ Association, the Council of Mortgage Lenders, the Payments Council and the UK Cards Association could merge.
The consultation paper sets out an “imperative for change”, making it clear the banks have little interest in two other options, namely improving coordination and merging bodies representing similar products like home loans or cards.
The CSFI think tank has estimated banks spend upwards of 50 million pounds on the top 10 trade associations alone. About 60% of UK Payments Council members are members of the BBA, and some 60 percent of UKCA members are also members of the Payments Council.
The nine associations with direct relevance to the review are: Asset based Finance Association, British Bankers’ Association, Council of Mortgage Lenders, Finance and Leasing Association, Intermediary Mortgage Lenders Association, Tax Incentivised Savings and Investment Association, Wealth Management Association, Payments Council and the UK Cards Association.
The final recommendations from the working group are due out in May of this year.
“It’s entirely right that the banking industry reviews whether its trade associations are configured to serve it most efficiently; and the Payments Council will be responding to this consultation,” said Mark Bowerman, Communications Manager at the Payments Council
A spokesperson for The UK Cards Association said: “The UK Cards Association recognises the need to ensure the most effective industry representation for members, and we have taken part in recent discussions on collaboration between trade associations. We will be working with our members over the coming weeks to develop a response to the consultation which reflects their perspective on the proposals.”
A British Bankers Association spokesman said: “These are interesting proposals. It is important for our members that they get effective representation and value for money from their trade associations. We will respond fully to this consultation in more detail in due course.”
“Financial services are a vital part of UK economy, and housing and mortgages are vital for British households. We welcome the opportunity to contribute to this review. We look forward to sharing our views on promoting the interests of all varieties of mortgage lenders and their customers, as part of a wider debate as to how trade bodies can deliver first class support for financial services firms,” said the Council of Mortgage Lenders.
April 2015: Consultation closes
May 2015: Final recommendations published