It is set to become much easier for new banks to enter the market following a review into the barriers to entry new banks face.
The Financial Services Authority (FSA) and the Bank of England have set out significant changes to regulatory requirements.
Some of these changes have already been implemented and the remainder will come into effect at legal cutover on 1 April 2013.
On 1 April 2013 the FSA will be replaced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Both the FCA and PRA will need to approve new entrants, the PRA for prudential issues and the FCA for conduct.
FSA chairman Adair Turner said of the changes: “This has been a comprehensive review and we have made some bold changes, ones that respond to the difficulties faced by applicant firms.
“We believe the changes will make a significant difference to the ease with which new firms can enter the UK banking system and, as a result, enable an increased competitive challenge to existing banks.”
The PRA’s philosophy of regulation will be that the possibility of bank failure should be accepted as a normal market process, provided there are clear mechanisms in place to resolve banks smoothly without threatening financial stability.
The full review and details of all of the changes can be read here.
So with the possibility of future mortgage competition more likely what will the panels of the new lender banks look like?
Chris Harris said: "All conveyancers know that the days of the open panel are dead.
“Conveyancers can only hope that their representative bodies are closely watching who may be entering the market and is devoting sufficient resources to convince those lenders to keep their panels as open as possible."
