Banking sector reforms plan 'unclear'
Wednesday 20 July 2011
Proposals to reform the banking sector by separating retail and investment arms have not been properly spelled out by the Independent Commission on Banking, MPs warned today.
An interim report by the ICB included "little detail" on its plans to force banks to ring-fence their retail arms, making it difficult to evaluate the pros and cons, according to findings by the influential Treasury Select Committee.
This led to concerns that suggestions for a full structural separation between the two types of banks had "not received sufficient analysis", it added.
The ICB's report, released in April, also suggested that Lloyds be forced to sell more than the 600 branches it had currently agreed with Europe to increase competition, and said that banks should be forced to hoard more money to make them more robust.
But the Treasury Select Committee said the report had "serious omissions" about how to improve corporate governance in the sector to encourage greater financial stability, while it also raised questions about how much its plans would cost customers.
The MPs have challenged the ICB, led by former head of the Office of Fair Trading Sir John Vickers, to address its concerns in its full report in September.
The Treasury Committee took evidence from the bosses of the UK's biggest four banks when coming up with its findings.
They warned that the ICB's structural reform options could potentially be costly and claimed that a retail ring-fence would contribute little to increased financial stability and may inadvertently increase risk-taking.
Committee chairman Andrew Tyrie said: "When the banks appeared before us, they articulated important concerns about the Vickers proposals.
"These are important objections and we believe Sir John needs to come out and demonstrate that his proposals would not have the negative or unintended consequences that his critics assert.
"A retail ring-fence would entail a huge change to the structure of the banking sector in the UK. Our long-term prosperity depends on getting this right."
- 3 Alton Towers crash: Four seriously injured and 16 guests trapped as Smiler ride carriages collide
- 4 Gay teenager 'forced to have sex with his own mother' to 'cure' his homosexuality, campaigners in India say
- 5 Ann Summers survey reveals the UK's favourite sex position
Man on naked bike ride gets ejected after becoming aroused
Caitlyn Jenner's mother Ester thought her daughter, formerly known as Bruce Jenner, had transitioned for money
Charles Kennedy 1959-2015: A gifted, compassionate politician whose career was cut short by the 'demon drink' - latest news
Alton Towers crash: Four seriously injured and 16 guests trapped as Smiler ride carriages collide
Gay teenager 'forced to have sex with his own mother' to 'cure' his homosexuality, campaigners in India say
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...