Osborne urges banking commission not to recommend full separation

George Osborne 21 Nov 480
Chancellor George Osborne: Don’t unpick Vickers’ consensus

Chancellor George Osborne has urged the Parliamentary Commission on Banking Standards not to recommend full seperation of UK banks.

Giving evidence to the Parliamentary Commission on Banking Standards today, Osborne hit out at critics who want the Government to go further than its ring-fence proposals for banks, claiming they are “unpicking” the reforms and risk a move back to “square one”.

He urged commission chair Andrew Tyrie not to recommend full seperation.

Sir John Vickers’ Independent Commission on Banking published its final report in November 2011, recommending ring-fencing banks’ retail arms from its investment activities. The Government brought forward the proposals in its draft banking reform bill published last month, set for parliamentary debate early next year.

Set up by Osborne in July, the PCBS has repeatedly questioned witnesses on whether the Government should go further than ring-fencing retail banks in its structural reforms.

Osborne said: “Let’s get on and implement it instead of getting to the top of the snakes and ladders board and getting on the snake that takes you all the way down to the bottom again.

“I would be very wary of unpicking a consensus that has been arrived at. We have spent two years getting to this point, we set up the Vickers commission, took evidence from 150 people, 1,500 pages, a green paper and a white paper, parliamentary debates in both house of parliament.

“We are now on the brink of introducing groundbreaking legislation that is set to be followed around the world, this is not the point to go back to square one.”

In a testy session, Tyrie hit back at Osborne’s attempts to limit the scope of the inquiry to not include structural issues, claiming a consensus is not always right. He has hinted that he will recommend tougher reforms when the commission publishes its interim report on 18 December.