Britain’s banks are facing major changes, with ring-fencing of retail and investment wings and ‘buffer’ funds to protect the businesses from future crises among the suggestions by the Independent Commission on Banking.
The recommendations have been made so that retail banking - the everyday stuff like current accounts, mortgages and loans - isn’t adversely affected by the riskier, but more profitable investment wings. The buffer funds are intended to make taxpayer-funded bailouts, similar to the ones in 2008, less of a necessity.
While any moves to keep the deeply-unpopular banking sector in check are generally met with public approval, the changes could see the costs passed on to the long-suffering consumer.
“This shake-up is good news for the taxpayer. It means that government banking rescues will be less likely in the future, so there’s less chance that we’ll all have to cough up to pay for bankers’ mistakes,” says Ed Bowsher, personal finance expert at Lovemoney.com. “However, the shake-up is probably bad news for consumers. That’s because the changes will mean lower profits for the banks and that will probably lead to higher charges for loans and mortgages. That said, the changes probably won’t be implemented until 2019, so they won’t make any difference for some time.”