'Ring-fencing' of banks poised to start within weeks of Lords vote
Critics raise fears of end to 'free' banking and branch closures in sweeping reforms
The most sweeping reforms to banking in more than a generation face their final hurdle in the House of Lords tonight amid criticism that they could spell the end for "free" retail banking.
The Banking Reform Bill is back in the Lords after an opposition amendment calling for licensing of bankers was defeated in the House of Commons after the Government brought forward its own version.
The bill's key measure is the creation of an electrified "ring fence" around retail banks to protect them from risky investment banking. Banks that try and breach the rules face being broken up.
If the bill in the form approved by the Commons is accepted it could receive Royal Assent in time to come into force in the new year.
The 200-plus page bill – it started off at 35 pages – will apply the force of law to most of the recommendations made by the cross party Parliamentary Commission on Banking Standards, chaired by Conservative MP Andrew Tyrie.
As well as the new ring fence, there is also a plan for an independent review of the effectiveness of the fence once it becomes operational – a move that was first recommended by Sir John Vickers' Independent Commission on Banking. If the ring fence is found not to be working, the entire British banking industry could be split apart at a later date.
The Government at first resisted many of the Tyrie Commission's more radical proposals but was forced to cave in under sustained pressure.
Other measures added to the bill include a requirement for the Prudential Regulation Authority (PRA) to prepare a report on proprietary trading – which sees banks placing bets in the market with their own money – soon after the ring fence comes into effect, to be followed by an independent review of the activity.
There will also be a new senior managers' regime to hold top bankers to account, while the PRA will have an objective to promote competition. Watchdogs will also have to hold yearly meeting with the auditors of firms which the PRA considers are important to the stability of the UK financial system.
However, a report from Policy Exchange, the right-leaning think-tank, has voiced fresh concerns that banks could be obliged to pass on extra costs to retail customers if the ring-fence plan is enforced too rigidly and business is lost to other countries. "Inevitably, this mix of much higher costs and lower revenues will be passed on to individuals and SMEs [small and medium-sized businesses]," said Policy Exchange, which warned of "further closures of high street branches and even the end of 'free' banking".
Meanwhile, City bankers expect their bonuses to soar 44 per cent this year after a strong performance by stock markets, according to new research from recruitment firm Astbury Mars-den. The average bonus for managing directors – just below board level – is set to rise £166,955, or around 115 per cent of their average salary.
- 1 The truth about 'girl things': Three cheers for Heather Watson's honesty
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Tennis fan suing Australian Open organisers for 'failing to shade spectators' during Murray match
- 5 Men behaving badly: Urinating while standing, 'manspreading' and the gendering of selfishness
Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Rob Lowe hits out at White House decision not to meet Israeli leader
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign
Winston Churchill: From accusations of anti-Semitism to the blunt refusal that led to the deaths of millions
British Muslim leaders outraged after Eric Pickles says followers of Islam should 'prove their identity'
UK terror fears: My jihadist son returned from Syria mentally scarred – now he is being ignored
Nigel Farage: NHS might have to be replaced by private health insurance
Billy Crystal: 'Stop shoving gay sex scenes in my face'
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...