A member of the Financial Policy Committee is calling for the Independent Commission on Banking’s recommendations to be implemented within two years, describing the 2019 deadline as “irrelevant”.
The ICB’s report recommended ringfencing retail banks, making them hold more capital and operate under a different set of executives. Writing in the Guardian, FPC external member Robert Jenkins says bank lobbyists will have time to water down the proposals between now and 2019.
Jenkins writes: “The ICB produced a good plan. It should be implemented within 24 months. Such a timetable will shock several bankers. Their deadline is 2019, a date so distant as to be irrelevant to their careers, a gap so long as to allow lobbyists to chip away until the proposal becomes both unrecognisable and ineffective. Why wait?”
Cable had originally proposed that the measures be included in the draft financial services bill, currently going through Parliament and due to be on the statute book by the end of 2012. But, he has now reached an agreement with Chancellor George Osborne to legislate for the move separately with legislation in place by 2015 and the new regime up and running by 2019.
Jenkins spent 16 years running trading floors at major banks. As a member of the FPC he will be partly responsible for ensuring stability of the UK financial system.
Jenkins dismisses the two “possible justifications” for delaying implementation – the risk to credit supply and the suggestion banks would not be able to implement the changes quickly enough – as absurd.
He says: “Why are we timid when it comes to financial reform? Is it that we are intimidated by those for whom the reforms are destined? There will be many unanticipated problems, there always are. But the sooner we start the sooner we will resolve them.”