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Government approve Banking Reform Proposals

The Government has published plans to implement the recommendations of a report by the Independent Commission on Banking.

The Report which proposed to make radical reforms to the UK Banking industry has been approved by the Government, who now plan to implement its recommendations by 2019.

During the Spring of 2012 the Government will publish a White Paper setting out further details of how the recommendations will be implemented.

The Chancellor of the Exchequer, George Osbourne commented: “The Independent Commission on Banking was set up last year to look at what I have called the ‘British Dilemma’: how Britain can be home to one of the world’s leading financial centres without exposing British taxpayers to the massive costs of those banks failing.

The Government is preparing the most far reaching reforms of British banking in our modern history - our objective is to make sure what happened in Britain never happens again.“

In the report, the Independent Commission on Banking recommended that the government manage the banks better able to absorb losses, make it easier and less costly to sort out banks which get into trouble and curb incentives for excessive risk taking.

They also encouraged them to ring fence banking services which are viral to households and SMEs, keeping them separate to wholesale and investment banking activities to insulate them from problems elsewhere. It will also mean that banks will be less likely to run excessive risks in the future.

The Secretary of State for Business, Innovation and Skills, the Rt Hon Dr Vince Cable, said: “The potential costs of an unsafe banking system are clear to everyone.

“Our reforms will protect taxpayers from the riskier aspects of banking and boost competition without harming the ability of UK banks to lend, to invest and to compete.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .