Banking reform to be debated in House of Lords
The House of Lords will debate amendments to the financial services bill on Tuesday, with some focusing on reforming the banking sector following recent scandals and calls for a tougher system.
A group of peers, including Tory ex-chancellor Lord Lawson and the archbishop of Canterbury Justin Welby, want tougher reforms to be imposed. Proposed measures include ringfencing the deposits of individuals and small businesses to separate them from “volatile investment bank activities”.
Andrew Tyrie MP, chairman of the cross-party banking commission, told the Financial Times that this was a “critical stage” in drawing up a far-reaching regulatory system.
“What we are doing here is designing a stable door and the arrangements for making sure it is kept locked. What we are needing is a sharp, cultural change by regulators, almost as much as we require it of banks, away from box-ticking, back-covering, to a much more judgemental approach”, he said.
Recent scandals involving the Royal Bank of Scotland (RBS) and the Co-operative Bank have led to increasing calls for reform in banking.
RBS was implicated in the Libor scandal, was fined for inaccurately reporting transactions and the outgoing chairman of UK Financial Investments indicated the bank could face another scandal and additional fines. This week, a report also suggested that RBS had deliberately “trapped” small businesses in order to benefit the bank.
The chancellor George Osborne is also expected to order an inquiry into how Paul Flowers was appointed chairman of the Co-operative Bank, despite admitting that he was under-qualified. The move follows Flowers’ admission that he bought Class A drugs.
The government also recently announced new legislation that will see the cost of taking out a payday loan capped. The introduction follows a political row in recent months over the role of payday lenders.
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