A member of the Bank of England's monetary policy committee, Adam Possen, has spoken out about the UK banking sector, saying it suffers from a lack of competition.
He said an unstable situation has been created by the consolidation of banks in the UK.
Mr Posen commented: "I actually think the UK is in some ways is ahead of its EU neighbours and even the US in terms of confronting banking problems."
He said this has meant that there are just five banks that carry out all the lending.
"That's not a competitive situation, that's not a stable situation,” he explained.
Chief executive officer (CEO) of the Financial Services Authority (FSA) Hector Sants recently said the uncertainty regarding the regulator's future was the greatest challenge to recruiting extra staff.
The FSA intends to recruit 460 people over the next year but staff morale is not being helped by institutional uncertainty, Mr Sants explained.
As part of a shake up of the way the regulator operates, the CEO recently revealed the FSA has called time on its "light-touch" regulation.
