Bank reforms need to be tougher- Banking Commission
Today a report from the Banking Standards Commission has come out to say that the Government’s current banking reforms plan “fall well short of what is required”
The Government is planning to ring-fence the banks so that the retail banking including invoice financing and personal banking is kept separate from the investment side of the bank which is often seen as the riskier side of the business.
However the BSC have reported today that these measures are not going far enough. They are recommending that regulators are given the power to break a bank up if they do not follow the proposals.
The commission have also put back some of the recommendations which were in the Vickers Report so that the banks don’t “game” the proposals. The new proposals also make it clear banks should be better prepared to absorb potential losses and ensure these do no impact the retail banking customers.
A Treasury spokesperson responded to the report saying:
“The government is committed to reforming the financial sector and putting in place a regulatory structure that learns the lessons of the past and protects taxpayers in the future. The government is grateful to the Parliamentary Commission on Banking Standards for its scrutiny of the draft bill and notes that it, ‘welcomes the government’s action to bring forward legislation to implement a ring-fence’.”
The Government is due to respond to the report when the Bill is officially presented to Parliament in the new year.