REGULATORS should all force banks to split retail arms from investment banking operations if a single lender abuses new rules, the Parliamentary Commission on Banking Standards said today.
The panel added that the city regulator should be given the responsibility to decide how far banks can leverage their capital for investment and lending.
It comes as the government’s Banking Reform Bill is due to be debated by MPs in parliament.
The commission added that that the proposed banking reforms do not go far enough. “There remains much more work to be done to improve the bill," said Conservative MP Andrew Tyrie, who heads the commission.
The commission was set up amid public outcry after Barclays was fined for rigging global interest rates, the latest in a string of banking scandals including the mis-selling of loan insurance and complex interest rate hedging products to small firms.