The Independent Commission on Banking released its final report today, outlining a series of shake ups for the #banking industry.
The report was met with support from the Government, who have confirmed their intentions of implementing the recommendations. A deadline of 2019 has been given for full implementation of the reforms.
The recommendations laid out in the report are intended to reduce the probability and impact of systematic financial crises in the future, as well as maintain the flow of credit to the economy and ensure that households and businesses are able to manage their risks and financial needs.
One of the biggest shake ups is the ring-fencing of domestic retail banking services, and global wholesale and investment banking operations. This change will, according to the Commission, make it easier to resolve banks that get into trouble in the future, while making monitoring easier to prevent this happening in the first place.
The plan to ring-fence, instead of completely separate the two banking divisions, recognises the affect and costs that separation could have on individuals and businesses.
Other recommendations designed to address the lack of competition in the banking industry include potentially referring the industry for a competition investigation in 2015, and making it easier for businesses and individuals to switch bank accounts.
Commenting on the report at Downing Street this morning, Chancellor George Osborne said, “This commission has tackled that big question that we face in Britain, which is how can we be a home to successful banks that compete around the world, but lend to British families and British businesses, but at the same time protecting us as taxpayers from the cost of them going wrong, and not ending up with a multi-million pound bill when the bank collapses.”
But banks are expected to criticise the report, the BBC’s business editor Robert Peston said: “The big UK banks, especially RBS and Barclays, are likely to be highly critical of the reforms. They will argue that the effect will be to both increase their costs and also the costs of credit for their customers – thus putting in danger the UK’s anaemic economic recovery.”
The British Bankers’ Association said: “It is vital that the full impact any further reforms will have on the economy, the recovery and banks’ ability to support their customers in the UK is understood.”
You can read the full report http://ow.ly/6rG68