Bank of England chief says ‘not sensible' to tear up ring-fencing rules
Ring-fencing was brought in after the 2008 financial crisis and requires banks to separate their retail services from their investment banking activities.
It aimed to protect UK consumers from the effects of any shocks felt by other parts of a bank and in the global financial markets.
But Government plans to reforms the rules, unveiled last week, are intended to make Britain more competitive globally and give banks more flexibility.
I think it has established itself as part of the system and to me it would not be sensible to take it away at this point Andrew Bailey, Bank of England Governor
Mr Bailey told MPs on the Treasury Committee: 'I do think the ring-fencing regime is an important part of the structure of the banking system.
'It makes the resolution of banks if they're in trouble much easier, and it benefits, particularly in terms of the UK, consumers, business and households.
'I'm sure there are things that can be improved and we will work constructively to get through that process.'
He added: 'I think it has established itself as part of the system and to me it would not be sensible to take it away at this point.'
The ring-fencing shake-up formed part of Rachel Reeves's 'Leeds reforms' – a package of measures which she said are set to be the biggest changes to financial services for more than a decade.
Ms Reeves said regulation 'still acts as a boot on the neck of businesses' in many areas, and urged regulators to avoid 'excessive caution'.
Asked if he agreed with those comments, Bank of England chief Mr Bailey said: 'It's not a term I'd use.'
'I think there are areas that we clearly should look at it… we've announced a whole range of things we're doing, and that's a good thing,' he told the committee.
'But we can't compromise on basic financial stability and that would be my overall message.'
However, Mr Bailey added that, post-Brexit, the UK is in a better position to reshape the financial rule book to suit the sector, rather than relying on EU rules.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Leader Live
15 minutes ago
- Leader Live
First sanctions targeting people-smuggling gangs take effect
They target 25 individuals and entities including a small boat supplier in Asia and gang leaders based in the Balkans and North Africa. They also hit 'middlemen' putting cash through the Hawala legal money transfer system in the Middle East, which is used in payments linked to Channel crossings. Albanian Bledar Lala, leader of the Belgian operations of an organised smuggling group, and a company in China that advertised small boats for people smuggling on an online marketplace are among those sanctioned. Today I launched the world's first sanctions regime against people smugglers and organised immigration crime, which are key drivers of irregular migration to the UK. It is our moral duty to smash this evil trade. These callous criminals will have nowhere to hide. — David Lammy (@DavidLammy) July 22, 2025 Foreign Secretary David Lammy said it was a 'landmark moment in the Government's work to tackle organised immigration crime (and) reduce irregular migration to the UK'. 'From Europe to Asia we are taking the fight to the people-smugglers who enable irregular migration, targeting them wherever they are in the world and making them pay for their actions. 'My message to the gangs who callously risk vulnerable lives for profit is this: we know who you are, and we will work with our partners around the world to hold you to account.' The measures aim to target organised crime gangs wherever they are in the world and disrupt their flow of cash, including freezing bank accounts, property and other assets, to hinder their activities. It will be illegal for UK businesses and banks to deal with anyone named on the list. The move follows legislation being introduced under the Border Security, Asylum and Immigration Bill to ramp up enforcement powers for police forces and partners to investigate and prosecute people smugglers.
North Wales Chronicle
15 minutes ago
- North Wales Chronicle
First sanctions targeting people-smuggling gangs take effect
They target 25 individuals and entities including a small boat supplier in Asia and gang leaders based in the Balkans and North Africa. They also hit 'middlemen' putting cash through the Hawala legal money transfer system in the Middle East, which is used in payments linked to Channel crossings. Albanian Bledar Lala, leader of the Belgian operations of an organised smuggling group, and a company in China that advertised small boats for people smuggling on an online marketplace are among those sanctioned. Today I launched the world's first sanctions regime against people smugglers and organised immigration crime, which are key drivers of irregular migration to the UK. It is our moral duty to smash this evil trade. These callous criminals will have nowhere to hide. — David Lammy (@DavidLammy) July 22, 2025 Foreign Secretary David Lammy said it was a 'landmark moment in the Government's work to tackle organised immigration crime (and) reduce irregular migration to the UK'. 'From Europe to Asia we are taking the fight to the people-smugglers who enable irregular migration, targeting them wherever they are in the world and making them pay for their actions. 'My message to the gangs who callously risk vulnerable lives for profit is this: we know who you are, and we will work with our partners around the world to hold you to account.' The measures aim to target organised crime gangs wherever they are in the world and disrupt their flow of cash, including freezing bank accounts, property and other assets, to hinder their activities. It will be illegal for UK businesses and banks to deal with anyone named on the list. The move follows legislation being introduced under the Border Security, Asylum and Immigration Bill to ramp up enforcement powers for police forces and partners to investigate and prosecute people smugglers.
The Independent
15 minutes ago
- The Independent
Brexit has left City of London's reputation at risk, Goldman Sachs chief warns
London's status as a global financial hub has been left 'fragile' by Brexit, the boss of Goldman Sachs has warned. David Solomon, chairman and chief executive of the bank, said it is diverting staff away from London to rival cities such as Paris, Frankfurt and Munich. Speaking to Sky's The Master Investor Podcast with Wilfred Frost, he said: "The financial industry is still driven by talent and capital formation, and those things are much more mobile than they were 25 years ago. "London continues to be an important financial centre. But because of Brexit, because of the way the world's evolving, the talent that was more centred here is more mobile. "We as a firm have many more people on the continent.' Detailing the bank's shift in focus from London to other European cities, Mr Solomon said: 'If you go back, you know, ten years ago, I think we probably had 80 people in Paris. You know, we have 400 people in Paris now... And so in Goldman Sachs today, if you're in Europe, you can live in London, you can live in Paris, you can live in Germany, in Frankfurt or Munich, you can live in Italy, you can live in Switzerland. "And we've got, you know, real offices. You just have to recognise that talent is more mobile." Goldman Sachs has around 6,000 employees in the UK. Mr Solomon also warned Rachel Reeves against further tax hikes, particularly on the wealthy, which could see more of the bank's staff leave the UK. Amid mounting calls for the chancellor to unveil a wealth tax, with Ms Reeves looking for ways to raise billions in her Budget this autumn, Mr Solomon warned: 'If you don't set a policy that keeps talent here, that encourages capital formation here, I think over time you risk that. "Incentives matter if you create tax policy or incentives that push people away, you harm your economy.' The bank chief said he has 'sympathy' for the chancellor ahead of her Budget, welcoming her focus on economic growth. 'And now we have to see the action steps that actually follow through and encourage that,' he added. Home Office minister Seema Malhotra blamed former prime minister Liz Truss for undermining Britain as a place to do business. Ms Malhotra told Sky News: 'There's been a sense of urgency coming out of the Treasury since we came into government last year, and that is because we saw the damage over 14 years, but most recently, since the Liz truss premiership, the damage that was done to our economy, to our reputation around the world, to the confidence of investors. 'And what I've seen while we've been in government… is a government that is extremely and completely focused on how we rebuild our economy, but also how we work with our the City of London, with our financial services, because this is a jewel in the crown for the UK, 'And I believe that with the chancellor and with our government working in partnership, once again, with British industry, that we will see that confidence restored.'
