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Swedish government hit the banks with a new reform policy that will see customers easily migrate their account

Swedish government hit the banks with a new reform policy that will see customers easily migrate their account
Thursday, 22 December 2011
It is really very easy to do banking in Sweden but there in one thing that make it a complex business in the Swedish banking sector for ordinary customers – costs. There is also the feeling that the sector is not competitive enough withy a few very big banks blockading the market.

You have no choice but to stick with one of the following – SEB, Nodea, Swedbank, Handelbanken and Danske bank – the later is a smaller player in the Swedish retail banking market.

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All the banks tend to behave the same way – charging for banking and for mortgages in a way that if an account holder leaves for one reason to the other banks which would have been a better alternative tend to act even worse. The effect is that the account holder becomes squeezed in the middle.

The government is now proposing that one can change their account but still keep the numbers because the government feels that it will improve competition.  At the same time the Swedish FSA has been ordered to put a control on banks' profit margins.

The idea to switch banks in order to put pressure on banks’ profit margins has risen over the past year. Now the government wants to include reviewing the possibility of customers bringing along their account number when they leave.

“It then becomes practically simpler. I would like to get customers to become more active. And if we can help we will do,” says Minister for Financial Markets, Peter Norman.

However the benefits are not commensurate with the cost, according to Marie-Louise Ulfward, lawyer for the Swedish Bankers' Association.

“It would be a huge cost to the financial system,” she says.

More significantly, the government's mission to the FSA is to control banks' profit margins on mortgages.
“Now, a special study of mortgage lending margins will be reported to us. This is partly a matter of competition in the banking sector, and partly on how monetary policy is implemented,” says Peter Norman.

The latest interest rate cut by the Riksbank was met immediately with a yawn from the major banks, which led to increased criticism of the financial system, including from the opposition that most think that Peter Norman and Finance Minister, Anders Borg are just talking workshops.
By Scancomar.se Team


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