There have been tough recommendations for reforming Britain’s banks from an influential panel of lawmakers.
A report from the Parliamentary Commission on Banking Standards said the government should have the power to force all of the UK’s banks to split their routine retail operations from riskier investment activities if needs be.
That goes much further than the government’s proposed banking sector reforms currently being debated in the UK parliament, which are intended to prevent a repeat of the need for taxpayer-funded bank bailouts.
Conservative MP Andrew Tyrie, who heads the commission, said that current proposals to change the industry fall short of what is required.
“There remains much more work to be done to improve the bill,” he said in the report published ahead of the debate.
The commission was set up amid public outcry after Barclays was fined for rigging global interest rates, the latest in a string of banking scandals including the mis-selling of loan insurance and complex interest rate hedging products to small firms.
All the leading British banks will be affected by the legislation.
The industry, however, has warned that the severity of the proposed reforms – more rigorous than those in France and Germany – could put British banks at a disadvantage against their continental rivals.
The commission called on the government to delay pushing through the Banking Reform Bill until its final report is published in May.
“The task of sorting out the banking industry, of which this bill will form a major part, is absolutely essential for the long-term health of the British economy. Let’s get it right,” the commission concluded.