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News Article

How could the Vickers report reform banking?

Published 19 December 2011 by

The Independent Commission on Banking (ICB) was established by the coalition Government in 2010, with the aim of reviewing the UK financial sector following the banking crisis. Chaired by Sir John Vickers, it published its report in September, with the intention of making it "easier and less costly to resolve banks that get into trouble".

The ICB's report recommended, amongst other proposals, that all banks' retail business should be separated from their riskier investment arms by 2019.

The BBC reports that Chancellor George Osborne is expected to announce today that he has accepted the proposals - which could see the UK's banking system undergo a major overhaul. However, although Vince Cable, the Business Secretary, said that the Government would accept the report 'in full', there have been concerns that some of Vickers' recommendations may have been 'watered down' by the Treasury.

Having said that, a BBC correspondent said that the ICB had been successful in achieving the majority of its aims: "Our banks will, in the coming five years, be forced to undergo significant financial, cultural and managerial reconstruction."

Along with 'ring-fencing' banks' retail businesses from their investment arms, the Commission proposed that measures should be taken to make it simpler for customers to switch bank accounts.

The report called for a free current account redirection service to be launched by September 2013 - featuring an improved system designed to catch all credits and debits going to a customer's closed former account. This would include automated payments on Direct Debits and debit cards.