Fund lobby group wants retail and investment banks to split

Michael Bow
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ASSET managers yesterday called for the government to beef up banking reform plans and consider splitting retail and investment banking operations completely.

Trade body the Investment Management Association told a parliamentary commission into banking that the recent scandal over product mis-selling had raised questions over whether ringfencing went far enough.

It also called on ministers not to cherry pick on reform recommendations from an independent commission into banking from Sir John Vickers last year.

The IMA said the government should adopt Vickers’ proposals to stop ringfenced retail banks from selling derivatives after the mis-selling of interest rate swaps and insurance protection.

IMA chief executive Richard Saunders said yesterday: “Questions need to be asked about the ‘universal banking’ model under which banks not only transact with their customers but also purport to offer advice and guidance.

“There is an inherent conflict of interest between the two if you are holding yourself out as offering a service while in reality treating your customer as an equal party to a transaction.”