BRITAIN’s clearing banks came under fire last night from the Governor of the Bank of England for taking longer than banks in most other major economies to process payments to personal and business customers.
In a broadside at the retail banking sector, Mervyn King told the City that the Bank of England was seeking to find ways to speed up the rate at which banks handled cheques and electronic payments.
Mr King told the Mansion House bankers and merchants dinner: “It is disappointing the UK now takes longer to clear payments — whether cheques or electronic payment — than almost any other member of the G10.”
The comments were his strongest swipe at the industry since he took over from Sir Edward George as the nation’s most powerful banking figure last summer. He also warned Gordon Brown about the deteriorating state of the nation’s finances. With the Chancellor alongside him at the City’s annual dinner, he sounded a note of alarm at the surge in public borrowing sparked by Mr Brown’s public spending drive.
Mr King is not alone in his concern about payment delays at banks. Vincent Cable, the Liberal Democrats’ Treasury spokesman, made a similar claim, saying individuals and small businesses must wait at least three days before money appears in accounts. Dr Cable said it damaged businesses, added to financial stress for families, and also allowed banks to earn millions of pounds in interest from the money while it was waiting to be transferred.
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Dr Cable also said that Britain’s banks were among the slowest in Europe at processing transactions. He said: “In Sweden the clearance process takes just a few hours. Payments made in the morning appear in recipients’ bank accounts that same afternoon. There is absolutely no reason why transactions cannot be processed more quickly.”