Cable Says Vickers Report On Ring-Fencing The Banks Will Be Accepted By Government In Full
The Business Secretary Vince Cable has revealed that the government will tomorrow accept in full the recommendation to ring-fence Britain's banks. The Vickers Report on banking, published in September, called for strict firewalls between the retail and investment arms of banks to protect consumers. The plan is designeed to prevent another financial crisis similar to the one seen in 2007-2008 when banks had to be bailed out to avoid the entire financial system, including cash machines, shutting down.
Vince Cable told Andrew Marr on BBC One: "We can't have a position where the banks are too big to fail. We've accepted the recommendations of the commission."
The Chancellor George Osborne will make a statement to MPs on Monday afternoon, but Vince Cable told Marr that the attempts by the banking industry to lobby against the ring-fence had failed. "We're getting on with it," said Cable, saying a "common view" had been reached between the two ministers.
"We just cannot risk having a repetition of the financial catastrophe that we had three years ago," said Cable, who claimed the major structural reform of the banks was part of the Liberal Democrats' influence on the coalition agenda.
The Vickers report calls for a "high ring-fence" to separate the retail and investment arms of banks. Its recommendation was considered radical, even though it stopped short of calling for a full break-up of Britain's banks.
The report also calls for significant reforms to make it easier for customers to switch their current accounts between banks.
Speaking to HuffPost UK on Sunday morning, Angela Knight from the British Banking Association said: "Now we know where the government is setting the consultation, we need to work closely with the government and others to effect the right sort of outcomes for our customers."
Warning that if the ring-fence was wrongly applied then it would become difficult for the banks to lend to consumers and businesses, Ms. Knight added: "If ring-fencing and capital are set in wrong places, customers will have to pay more or go to non-UK banks, of which there are plenty. Getting the balance right is crucial."