Banking reforms riddled with holes, MPs complain

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The Independent Online

The Treasury Select Committee has called on the Independent Commission on Banking (ICB) to plug gaps in its interim report to support its proposals for reform.

The MPs demanded that before the ICB publishes its final report in September it should:

* Back up its estimate that banks receive a £10bn-plus implicit subsidy from the taxpayer and agree with the banks a way to measure the subsidy

* Explain fully why it decided against complete separation of retail and investment banking;

* Give more detail on the cost to the economy and companies of different forms of separation;

* Explain why a ring-fence is needed on top of other new rules designed to make banks safer.

Andrew Tyrie, the chairman of the committee, said: "It's clear that the argumentation is incomplete. The case has been made without a lot of the necessary detail to support it.

"It is essential that all the banks' arguments against this and all the arguments for a ring fence are fully exposed to public view. A stitch up between the ICB and the banks, or the perception of one, would be damaging."

Mr Tyrie also called on the Government not to pre-judge the ICB's findings and said the Chancellor was right to back away from briefings last month that he had already decided in favour of ring fencing.