Benny Higgins, Tesco Bank’s chief executive, told the Treasury Select Committee yesterday that big banks were working as a “closed user group”.
“The established banks routinely share current account data which can be used to calculate income and expenditure, as well as wider product holdings, through a closed user group,” Benny Higgins said. “This puts smaller players at a disadvantage.”
The banks are also accused of operating a “cartel” on consumer credit data, a claim which they have refuted.
Brian Hartzer, RBS’s UK retail bank head, told the committee: “As far as I’m aware, there is no sharing of credit data amongst the big banks, other than via the credit bureaus who make that data available to people. I don’t know why I would share data like that with other competitors.”
RBS chief exec Stephen Hester backed Brian Hartzer up, adding that Tesco’s vast database on customer habits was its key strength to challenge the established banks. “That’s terrific, that’s their competitive edge, let them use it and it will keep us on our toes.”
With six million customer accounts and a £4.8bn loan book, Tesco Bank is a growing player in the market. But Tesco Bank wants more, planning to launch mortgages and current accounts.
“It is an unequivocal conclusion that the market is not competitive,” Benny Higgins said.
Tesco Bank believes the banks are working together through a company called Callcredit, a data management company.
The Daily Telegraph reports that Callcredit runs a so-called “founder group” for the UK’s seven largest banks to share information on the creditworthiness of customers.
Barclays, HSBC, Lloyds Banking Group and RBS are said to be the original founders of the group, and have since been joined by three other banks.
A spokesperson for Callcredit told the Telegraph: “This is not a cartel,” adding that any bank that met the entry standard of one million or more current accounts could join the group.