Starting a bank in the UK

For the various schemes that I have been suggesting recently, it would be wondeful if we had our very own bank that could be run in a way that was in the interest of citizens. A couple of days ago I had a post about how to start a bank in the USA, where things seem surprisingly simple.

What about starting your own bank in the UK? Well, the BBC broadcast a program in 2009 that dealt with exactly that question. You can find it here.

There have also been various articles in papers. For example, the Telegraph had an article in 2009  called "How to save the economy and make a fortune - set up a bank". The article notes that "In the US, the market is already reacting as it should. Since the onset of the crisis there have been around 200 banking start-ups....  In the UK, however, there has been little to compensate for the disappearance of some of the biggest names on the high street."

In another article in the Telegraph in August 2009 ("Why it is an ideal time to set up a bank"). It also notes the discrepency with the US : "So far this year, only one bank has been authorised by the Financial Services Authority (FSA). Last year, it was seven. By comparison, the US licenses about 100 start-ups every year."

Why is it so rare to start a bank in the UK?  By looking further, I have discovered that the UK's Financial Services Authority has an entire part of its website concerned with the mechanisms by which you can be granted the authority to open a bank.  There is a handbook with detailed information about the requirements that can be found here. And there is a section specifically dealing with "Banking applications and Variation of Permission to add 'Accepting Deposits'." It seems complicated, and in the end, the FSA presumably gets to decide yes or no whether to approve the request. I must confess that this leaves open a serious chance that the banking system could use this to vet anyone trying to get in on the game. That's one reason why I think that it may be simpler to try and find some friendly banker with a conscience who would be prepared to help out.