Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the future of universal banking in the UK.

Financial entities that wish to operate as universal banks are subject to the 2012 Financial Services (Banking Reform) Act. The Act requires large UK banks with retail deposits totaling more than £25 billion to ring-fence the deposits of individuals and small businesses from other activities within their groups, such as investment and international banking. By insulating these core banking services in a separate legal entity, ring-fencing will support continuity of provision of vital services to the economy if there are shocks originating elsewhere in the group and the global financial system. It will also make banks that provide these essential services simpler and more resolvable and therefore prevent the costs of failing banks falling on taxpayers. This restructuring was successfully completed by all UK banks within scope in the summer of 2018 and the regime will come into force in January 2019.

Ring-fencing has been part of the Government’s package of banking reforms since 2010, designed to deliver a stable, sustainable and competitive banking system so banks will be better placed to meet their core purpose of lending to the real economy and contributing to economic growth. As part of this strategy, competition and innovation is at the heart of the Government’s vision for UK financial services to deliver greater choice and value for all.