The government has reneged on its promise to reform the banking sector, says the man who published a Treasury-sponsored review in 2000.
Don Cruickshank was appointed to review the sector in 1998
In that report Don Cruickshank said nearly two thirds of customer problems occur because banks control the credit card networks and cheque clearing systems, which he said merited the setting-up of a separate regulator.
But despite Chancellor Gordon Brown's backing of his idea of "Paycom" at the time of the review, Mr Cruickshank said a shared interest between the government and the banks has prevented it from happening.
Speaking to BBC Radio 4's Money Box programme, he said banks were resistant to change because of the cost, but that a regulator was needed to make decisions in the public interest rather than shareholder interest.
"Five years later, what do we have? A taskforce which will never do anything which is really substantive," he said.
He called on the government to reconsider whether Paycom should be put in place, saying that: "It definitely would have a prize far higher than the cost of getting there."
He also recommended the government look at the current regulatory environment, and "do something about the incentives on the FSA - the regulator - and the OFT, to be harsher when trying to balance the public interest in relation to banks."
Mr Cruickshank's comments have come during a record season for bank profits.
The latest figures are from the Royal Bank of Scotland, which reported a 14% increase in its annual pre-tax profit, to just over £8bn.
HSBC, which reports on Monday, is expected to unveil profits of around £10 billion.
Mr Cruickshank said he believes such profits are "way in excess of their cost to the capital they need, and they could be a lot lower without any risk to the banking system.
"Competitive markets benefit consumers. High profits per se do not."
Despite his report and the government's initial support, Mr Cruickshank said nothing has changed because of what he calls a "regulatory contract" between the government and the banks:
"It actually quite suits the government to have relatively few big banks who are very unlikely to fail and who keep the customers' confidence.
"It is a shared interest between the banks and the government in having relatively few players, and relatively high levels of profitability, and too much of the time poor service."
However, Paul Smee, the new chief executive of the Association of Payment Clearing Systems (Apacs), said there is no need for a payment regulator like Paycom:
"Any setting up of a regulator has costs, has time consequences. It is the creation of a new institution.
"And we've got a competition regulator in this country that's looking at payment issues. I don't really see what Paycom would bring to the party."
He also claimed that work was underway looking at issues identified in the report and subsequently, but added:
"I think there is a pay-off between the introduction of new ideas and the maintenance of stability.
"We have a payment system in this country which has not and does not fail, and I would suggest that is one of the biggest requirements you can have."
Asked how soon the industry would be able to improve clearing times, one of the most common customer complaints, he said:
"There is a lot of work going on to identity the best and safest route for that, and I do not want to put a date on it at the moment."
BBC Radio 4's Money Box was broadcast on Saturday, 26 February, 2005, at 1204 GMT.
The programme will be repeated on Sunday, 27 February, 2005, at 2102 GMT.