Do UK banks dictate your finances?

In years gone by there was major competition on the UK high street with regards to financial services and banking facilities although today the UK sector is dominated by a relatively small band of companies. As a consequence, there is a growing belief that consumers in the UK have lost part of their power to make changes in the UK financial sector and indeed UK banks are actually dictating the finances of not only consumers but also businesses in the UK. Can this be true?

The fact that UK taxpayers were forced to bail out the UK banking industry to the tune of tens of billions of pounds is a perfect example of how the "tail is wagging the dog". In years gone by the banking industry would have been forced to make promises and introduce targets to guarantee that kind of backing but times have changed. The previous government made a number of changes to the regulatory environment and indeed attempted to turn up the heat on the UK banking arena but to no avail. We've also seen the coalition government attempt a similar move which has as yet been unsuccessful.

The truth is that the UK economy needs a banking arena more than the banking arena needs the help of the UK government. As a consequence, the UK financial sector is making it very difficult for the UK authorities to push through lending increases and improved liquidity.