At a Treasury Select Committee meeting on competition and choice in the banking sector Mark Garnier MP says Hector Sants, chief executive officer of the FSA, told him waiting times were seven months.
But Vernon Hill, vice-chairman of Metro Bank, who was a witness at the hearing says it took his bank 18 months to become authorised.
Garnier says: “I was asking Hector Sants about waiting times last week and whether it was taking 18 months and he said no, it takes seven months. So he was lying was he?”
Hill repeated that it took his bank 18 months to become authorised.
Garnier adds: “The Office of Fair Trading has raised a Catch 22 experience where you have to raise the capital before a license so you are in effect stepping into the abyss.”
Hill says this was a flaw in the system that has now been resolved.
He says: “That was a flaw in their approval procedure and I believe it has now changed it. The FSA made us raise all the money, all the IT systems, tested the IT systems and then gave us the final license. It knows that is a procedure they can not work.”
Hill adds: “It had a series of processes some of which needed to change slightly but it took us about 18 months which isn’t that different from the American experience.
But Anthony Thomson, chairman of Metro Bank, who was also a witness, says the FSA were extremely good to deal with.