Once in a lifetime opportunity to reform the banksGovernment to respond to key banking report

17 December 2011

canary wharf

The government has invested billions of taxpayer pounds in the banking sector

With the government set to respond to the Independent Commission on Banking's (ICBs) recommendations for banking reform on Monday 19 December, Which? is reminding the Treasury that this is a once in a lifetime opportunity to reform the banking industry.

Research from Which? shows that only one in five are confident that the government will actually reform the banking sector. This is a big concern, considering 82% think the banking sector needs to change.

Which? chief executive, Peter Vicary-Smith, said: 'The government needs to show consumers it hasn't let the banks off the hook and the banks must work harder to restore consumer trust.'

Reform the banking industry

On 12 September 2011, Sir John Vickers delivered the Independent Commission on Banking (ICB) report to the UK government.  

The report set out plans for how the banking industry should be radically reformed to prevent another financial crisis and remove the taxpayer guarantee against bank failure.

Ring-fence retail banking

Which? supports the ICB's proposal to ring-fence retail banking from investment banking.

Ring-fencing would allow the riskier investment banks to fail if they make poor decisions or run their businesses in an imprudent way. This would help limit the liability of government - and in turn, taxpayers - to bail out the banks in the future.

Which? is calling on the government to set out a clear timescale for ring-fencing and commit to delivering reforms.

Lloyds divestment

The ICB report also recommended that the multitude of Lloyds branches be sold to a 'viable challenger' to the banking sector to improve competition on the high street.

Which? has asked that if Lloyds does not agree to sell more assets, the Competition Commission should step in to investigate the issue.

Even after the existing divestment, Lloyds will still have 25% of the current account market, and around 20% of the mortgage, savings and unsecured loan markets.

Consumers at heart of reform

Which? has gathered feedback over the years to ensure consumers concerns are at the heart of baking reform.

Before the ICB made its recommendations, Which? invited Sir John Vickers to a Which? debate on banking so he could hear first-hand the issues concerning consumers the most.  

More on this...

  • The banking reform journey - use our interactive timeline
  • Have your say - on the latest banking debates on the Which? Conversation
  • Which? personal finance campaigns - find out what we're doing