The Government is coming under growing pressure to fast-track reforms that will ringfence the retail operations of banks, with Liberal Democrat and Labour MPs calling for the deadline to be brought forward by a number of years.
The coalition has adopted most of the proposals from Sir John Vickers’ Independent Commission on Banking with a banking reform white paper in June setting out plans to ringfence banks’ retail operations from its investment arms and new capital requirements.
Under the plans, banks could have until 2019 before the rules need to be in place although deputy prime minister Nick Clegg has described this date as a “backstop”.
In the wake of recent Libor rigging and interest swap rate misselling scandals, MPs are now calling for reforms to be fast-tracked.
Labour MP and Treasury select committee member John Mann says it is likely the reforms will be moved forward by at least five years.
He says: “It will be unstoppable. There will be support to move it forward but maybe not as quickly as I would like, which is full implementation by next year. It is an inevitable consequence of the emerging Libor scandal as we have only seen a tiny part of it.”
Liberal Democrat MP Duncan Hames says banking reforms could be debated in Parliament sooner now House of Lords reform has been dropped.
He says: “If the Treasury needs time in Parliament to accelerate action to implement the proposals, then it may find it has more opportunity to do it than it did two months ago.”
Mann believes the bill should be expanded to include criminal responsibility for the boards of banks and tougher penalties for firms misusing client money.