What Did You Do in the War, Daddy?
This phrase originates from a 1915 British WWI recruitment poster by Savile Lumley, showing a father being asked by his child "Daddy, what did YOU do in the Great War?" — designed to shame men into enlisting.
Twenty Years on the Front Line of Cruickshank's Payments Revolution
People often remember exactly where they were when a defining moment happened. JFK. Princess Diana. The launch of Faster Payments in the UK. I remember precisely where I was when Competition in UK Banking: A Report to the Chancellor of the Exchequer (also known as the Cruickshank Review) was published. It was March 2000, I was in an office in the City of London, and Mike Bury announced the news loudly across the office with the kind of jubilation you’d normally reserve for the birth of a baby: “We’ve got PayCom.”
As I listened to Mike’s voice, I - at the time a product director for the UK’s domestic payment products at a large incumbent bank - suspected life might never be the same again. My suspicions turned out to be right. Just not in the way I first feared.
Of the review’s findings, the challenge of “excess profits” struck me as a strange one. As a payments product director, I was living the reality of free-in-credit banking: consumers had access to my payment product portfolio on an “all-you-can-eat” basis, at no direct charge.
It was a different finding - on SME banking and low switching - that would come to shape my own career far more directly. Thirteen years later, I became the first custodian of the world’s first Current Account Switching Service.
I didn’t see that coming in 2000.
Nor, just three years after that, did I envisage being appointed the first CEO of a standalone, not-for-profit Payment System Operator — Bacs Payment Schemes Limited (Bacs) - with a mandate that sought to tear down the very principle Cruickshank had put his finger on: payment systems as gatekept infrastructure, run by and for their own incumbent owners. Over the years that followed, we removed the barriers - both real and perceived - to direct participation in Bacs, CHAPS, and Faster Payments. Price transparency, both on onboarding and running costs, and the setting of a sustainable, appropriate price per transaction, became a personal focus of mine as CEO of what were, by then, systemically important payment schemes.
It took much longer for the UK to get a dedicated regulator. The Payments Council’s attempt at industry self-regulation proved short-lived and, for me personally, was a difficult period. Interestingly, I later spent a time as a senior adviser to the Payment Systems Regulator, as it began its own journey - after being established as the world’s first dedicated payment systems regulator - of amalgamation into the Financial Conduct Authority.
Four blunt findings in a report published when New Labour and Cool Britannia ruled.
Little did I know, in March 2000, how central a part I would end up playing in addressing every one of Cruickshank’s key concerns.
Was the Cruickshank Review ahead of its time? That’s the wrong question, or at least an easy one. The harder question is what it started. Two decades ago, the report defined a problem that has dominated payments policy ever since, from the PSR’s creation and amalgamation, to the creation of Pay.UK, to the question of a Vocalink sale, to the work now underway around the New Retail Payments Infrastructure (NewRPI), suggests we are standing at another policy and infrastructure crossroads.
Cruickshank’s own conclusion - that the report’s lasting legacy is not any specific mechanism, but the now largely unchallenged principle that infrastructure this essential cannot safely be left to govern itself - is being tested again.
Perhaps it’s time to step back from the very concept of payment infrastructure we built in Cruickshank’s wake, and ask a more fundamental question: do we need critical national infrastructure “utility” payment rails run as a nationalised function on which we stimulate genuine competition at the overlay level, on a truly open-access and commercial basis?
As NewRPI rises from the ashes of the New Payments Architecture (NPA), and the Retail Payments Infrastructure Board (RPIB) begins to take shape, we face a once-in-a-generation opportunity to reclaim our position as the thought leaders - and the do-ers - of payments.
So, with that in mind: what did Cruickshank actually say all that time ago?
Here’s a summary, of a report written in an era when New Labour and Cool Britannia ruled the waves.
A Report Commissioned in Frustration
By the late 1990s, a persistent unease had settled over UK banking policy circles. The economy was growing, the City of London was thriving as a global financial centre, and yet the domestic retail and small business banking market looked strikingly uncompetitive: a handful of large clearing banks dominated current accounts, small business lending, and critically the payment systems that underpinned the entire industry.
In 1998, Chancellor of the Exchequer Gordon Brown commissioned Don Cruickshank, a former director general of Oftel and chairman of the London Stock Exchange, to conduct an independent review of competition in UK banking.
The result, published in March 2000 as Competition in UK Banking: A Report to the Chancellor of the Exchequer, became one of the most consequential documents in the modern history of UK payments policy not because its recommendations were adopted wholesale, but because of the intellectual template it laid down, one that would take over a decade to fully build.
The Diagnosis: A System Marking Its Own Homework
Cruickshank’s central insight was structural rather than merely behavioural. It was not simply that banks were pricing unfairly, it was that the institutions supplying core banking and payment infrastructure were the very same institutions that competed with each other, and with everyone else, on top of it.
The clearing banks owned and governed Bacs, CHAPS, and the cheque clearing system collectively, through industry bodies they themselves controlled. This gave them both the means and the incentive to set the rules of access, pricing, and technical standards in ways that suited incumbents and discouraged new entrants - a textbook conflict of interest that competition law in most other sectors would not have tolerated.
The review’s findings were blunt:
Excess profits. Cruickshank estimated that a lack of effective competition in banking services, particularly for personal current accounts and small business banking, was costing UK customers in the order of £3–5 billion a year — extracted not through any single dramatic abuse, but through the steady, compounding effect of limited choice and weak competitive pressure.
SME banking as a particular failure. Small and medium-sized businesses, Cruickshank found, faced a market that was both highly concentrated and marked by low switching rates, leaving them paying more and receiving worse service than a genuinely competitive market would produce. Larger corporates, with more sophisticated treasury functions and greater bargaining power, were far better placed to negotiate favourable terms — meaning the competitive failure fell hardest on exactly the businesses least equipped to absorb it.
Payment systems as gatekept infrastructure. Perhaps the review’s most far-reaching contribution was its treatment of payment systems not as a neutral, back-office utility, but as a form of essential infrastructure analogous to telecoms networks or energy grids infrastructure that, when controlled exclusively by a small club of incumbent users, would inevitably be run in ways that protected their collective position rather than maximised innovation or access for others.
Barriers to entry. New entrants — smaller banks, building societies, and what would today be called fintechs — found it difficult or prohibitively expensive to gain direct access to Bacs, CHAPS, or cheque clearing, typically needing to access these systems indirectly through an established bank, on terms that incumbent bank set.
Opaque interbank pricing. The review criticised the lack of transparency in how interchange and other interbank fees were determined, arguing that hidden pricing mechanisms further entrenched the incumbents’ advantage and made it difficult for regulators, let alone customers, to assess whether charges were reasonable.
The Recommendations: Regulation for a Utility
Having diagnosed payment systems as a form of gatekept national infrastructure, Cruickshank’s prescriptions followed a logic familiar from earlier utility regulation in telecoms and energy:
A dedicated payment systems regulator informally dubbed “PayCom” in commentary at the time with the specific powers, expertise, and independence needed to oversee access, pricing, and governance of payment systems, rather than leaving this to general competition authorities or industry self-regulation.
Referral to the Competition Commission of both the SME banking market and the governance of payment systems, for a fuller investigation with the power to mandate structural remedies if voluntary reform proved insufficient.
Open access to payment infrastructure, so that banks, building societies, and other providers could participate in Bacs, CHAPS, and cheque clearing on fair and transparent terms, rather than being dependent on commercial relationships with direct-member incumbents who were simultaneously their competitors.
Greater transparency in interbank and interchange fee-setting, to allow proper scrutiny of costs that were ultimately passed through to consumers and merchants.
Impact: Slow-Burning but Foundational
The immediate legislative response was more modest than the report’s ambition.
No standalone “PayCom” regulator was created in the years immediately following publication. However, the review’s influence proved durable rather than fleeting, shaping UK payments and banking policy in three overlapping ways.
First, the Competition Commission did take up the SME banking referral, launching an investigation that led to remedies aimed at improving transparency and switching in small business banking, though critics later argued the impact was limited relative to the scale of the problem Cruickshank had identified.
Second, the review fed directly into industry and government efforts to formalise payments governance. The Payments Council, established in 2007, represented an attempt to create clearer, more accountable industry-level oversight of UK payment schemes though it remained an industry body rather than the independent statutory regulator Cruickshank had envisaged, and was itself later judged insufficiently independent from the banks it was meant to oversee.
Third, and most significantly, Cruickshank’s core recommendation was, in essence, finally delivered fifteen years after publication. The Payment Systems Regulator (PSR) was established under the Financial Services (Banking Reform) Act 2013 and became fully operational in 2015, as a subsidiary of the Financial Conduct Authority with a statutory objective to promote competition, innovation, and the interests of payment system users. Its founding remit to open up access to payment systems, scrutinise governance, and ensure infrastructure was not run purely in the interests of incumbent owners reads, in substance, as the direct institutional descendant of the “PayCom” Cruickshank had proposed in 2000.
A Review Ahead of Its Time
Read today, the Cruickshank Review is notable less for any single recommendation than for how early and clearly it identified a problem that would come to dominate payments policy for the following two decades: that payment infrastructure, when owned and governed exclusively by its largest incumbent users, tends to serve those incumbents first.
This diagnosis went on to inform not only the creation of the PSR, but the broader regulatory push toward open banking, third-party access, and infrastructure neutrality that has shaped UK payments well into the 2020s.
Cruickshank’s report is a useful reminder that payments policy moves on a longer clock than payments technology. The Image Clearing System, contactless cards, and open banking APIs all arrived and matured within the same period it took for Cruickshank’s central regulatory recommendation to be enacted in full.
