19 December 2011

Government sets out plans to reform the structure of banking in the UK

The UK Government will legislate to create a stable banking sector that supports lending to businesses and families, and removes the implicit taxpayer guarantee in the event of a bank failure.

The Government will implement the ICB’s advice in stages with the full package of reforms completed by 2019.  All necessary legislation will therefore be put in place by the end of this Parliament. The Government will publish a White Paper in spring 2012 setting out further detail on how the recommendations will be implemented; in advance of that, the Government is open to views on how to implement these plans.

The Chancellor of the Exchequer, the Rt Hon George Osborne, said: “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.”

The Secretary of State for Business, Innovation and Skills, the Rt Hon Dr Vince Cable, said: "Sir John Vickers has produced a comprehensive plan to give the UK a more stable banking system that removes the implicit taxpayer subsidy. We will take forward a full programme of reform with legislation in place to implement the ring-fence by 2015.

"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."

Press release

ICB Report, 12 September 2011

© HM Treasury