Gadhia calls for portable account numbers

BANK customers should be able to transfer their account numbers as easily as their national insurance number, one of the newer entrants to the market told MPs yesterday.

Jayne-Anne Gadhia, chief executive of Virgin Money, said it could "revolutionise" how the sector worked for consumers and break what she claimed was an "oligopoly" of the big five banks in current accounts.

Gadhia told the Treasury select committee that the Big Five - Royal Bank of Scotland, Lloyds, Barclays, HSBC and Santander - had 90 per cent of the current account market and fewer than 5 per cent of customers switched banks each year.

"If we can give everybody a national insurance number, and we have done that for decades, we should be able to change people's bank accounts (to make them similarly portable]," she said.

Gadhia said the big banks claimed the exercise would be too expensive, but added: "This is from banks making billions of pounds of profit. It could revolutionise how the banking system works."

However, later in the session with MPs, Ana Botin, new chief executive at Santander UK, disagreed with the Virgin Money boss. She suggested the time and practicability of making current account numbers portable between banks might be excessive.

Botin, who said she had 30 years experience in banking, added: "It seems that it would be a very expensive thing to do. Maybe that's not the thing we need to focus on. Probably the time and effort would be better served in other areas."

The Santander boss also defended the universal banking model, where some banks incorporate both high street and investment banking, in the wake of the financial crisis.

Gadhia, whose group is a purely retail bank, said she did not advocate "cutting banks in half", keeping activities like deposits and mortgages separate from investment banking.

But she said "extreme problems we have had require extreme solutions", and called for retail banking and investment banking subsidiaries to have ringfenced balance sheets.