LONDON (TIP): Britain’s multi-trillion pound system for shuffling payments and cheques will be streamlined under plans announced on Thursday to help newcomers compete more easily with long established banks and improve services to customers.

Britain is keen to increase competition in banking, a sector dominated by the “Big Four” lenders – Lloyds, HSBC, Barclays and RBS. Any new banks have to use existing payments systems, largely set up by the big lenders, for a fee.

A group created by the Payment Systems Regulator (PSR) and Bank of England recommended on Thursday that the three retail payment systems, Bacs, Cheque and Credit Clearing Company, and Faster Payments Scheme be consolidated under one roof.

That would mean new banks will only have to make one application to use all the three systems, thereby speeding up the process and cutting costs.

“The consolidation would be an important first step towards a generational change in UK payments,” PSR Managing Director, Hannah Nixon, said in a statement.

“Consumers will also benefit from new entrants coming into the market and offering users of payment services new, innovative products.”

Although only a recommendation, in practice the three payments firms have little choice but to accept the proposal by the regulator and the BoE.

The PSR has powers to force through changes.

“We welcome the report, and look forward to seeing its recommendations taken forward in a way which promotes an orderly and smooth transition,” said David Bailey, the BoE’s director for financial market infrastructure.

It is expected that the consolidation will be substantially completed by the end of 2017, the PSR said.

“While good progress has been made, support from across the industry is vital and significant collaborative work still needs to be done if the plan is to be delivered successfully and the benefits of the consolidation unlocked,” said Robert Stansbury, who chairs the joint BoE, regulator, delivery group. (Reuters)