The Parliamentary Commission on Banking Standards has published its first report today, outlining its support for a ring fence that separates retail banks from their risky investment arms to be ‘electrified’.
The report contains the Commission’s review of the government’s draft Financial Services Banking Reform Bill and associated proposals.
The report welcomes the government’s plans to ring-fence but says a legislative backstop, allowing the regulator to fully separate the banks, is needed to ensure the ring fence works.
2019 is too late
Which? agrees that the ring-fence between retail banks and their risky investment arms must be robust to ensure consumers never again have to foot the bill for a banking bailout that cost £2,000 for every man, woman and child.
Which? chief executive Peter Vicary-Smith said: ‘The Banking Reform Bill must be strengthened, and banks should implement the ring-fence as soon as possible, not wait until 2019.’
The Chairman of the Parliamentary Commission on Banking Standards, Andrew Tyrie MP, said: ‘For the ring-fence to succeed, banks need to be discouraged from gaming the rules. All history tells us they will do this unless incentivised not to.’
Big Change in banking
Earlier this year, Which? launched the Big Change campaign to push the Parliamentary Commission to deliver proposals that ensure banks work for customers, not bankers.
Mr Vicary-Smith said: ‘We also need to see much wider reforms to banking culture and practices if we’re to avoid a repeat of the mis-selling and rate-rigging scandals of recent years’. The Big Change campaigns calls for:
- Bankers to put customers first, not sales
- Bankers to meet professional standards and comply with a code of conduct
- Bankers punished for mis-selling and bad practice
Which? handed in a dossier of evidence to the Parliamentary Commission on Banking Standards, which included our bank staff survey, showing bank staff are under more pressure than ever to sell.
This was in addition to more than 120,000 signatures from the general public pledging their support for ‘Big Change’ in banking with Which? and 38 Degrees.