17:09 12 March 2013
After the reputation of banks were undermined due to PPI and Libor scandals, the government is now proposing reforms on the banking sector. However, the banking commission doesn’t think that the proposed reforms are good enough.
Although the government has adopted other proposals by the commission, it rejected the option of giving regulators the power to force a complete split of retail and investment banking across the industry.
The government accepted the Parliamentary Commission on Banking Standard’s proposal to “electrify the ring-fence” if banks refused to implement the reforms. This means that regulators could split up the individual banks should it undermine the division between High Street retail banking and riskier investment banking.
However, this will only take effect with the express approval of the Treasury, which already rejected the idea over fears of giving too much power to regulators.
MrTyrie, the head Parliamentary Commission on Banking Standard isn’t happy about the government’s proposals. He said: "The government rejected a number of important recommendations. We have concluded that the government's arguments are insubstantial.
"There remains much more work to be done to improve the bill"
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