Independent Commission on Banking Interim Report

Download or read book Independent Commission on Banking Interim Report written by Great Britain. Independent Banking Commission and published by . This book was released on 2011-04-11 with total page 210 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Interim Report sets out the Commission's current and provisional views on possible reforms to improve stability and competition in UK banking, and seeks responses to those views. The Commission's final report will be published in September. The financial crisis that began in 2007 exposed fundamental weaknesses in the global financial system and has had enormous economic costs in terms of lost output, higher unemployment and weakened public finances. The report covers the need for reform in the UK banking sector; current reform initiatives; reform options - financial stability; reform options - competition and consultation questions. One of the policy approaches discussed would be structural radicalism, for example to require retail banking and wholesale and investment banking to be in wholly separate firms. Another would be to be laisser-faire about structure and to seek to achieve stability by very high capital requirements across the board. The Commission believes the most effective approach is likely to be a complementary combination of more moderate measures towards loss-absorbency and structure.This Interim Report discusses three initiatives (beyond the continued application of general competition and merger law) that could improve competition. The first concerns structural measures to improve competition. Second, competition among incumbent banks, and between them and challengers, is blunted by the actual and perceived difficulties for customers switching accounts, by poor conditions for consumer choice more generally, and by barriers to entry. This Interim Report suggests that it may be possible to introduce greatly improved means of switching at reasonable cost, in which case the industry should be required to do this within a short timescale, and that barriers to entry may be able to be reduced. Thirdly, the Commission regards the Financial Conduct Authority proposed as part of the Government's reforms of the regulatory architecture as potentially a vital spur to competition in banking.