Bank of England governor Andrew Bailey has cautioned against tearing up the UK’s ring-fencing regime, saying it had benefited consumers and the banks.
His comments came after Chancellor Rachel Reeves said last week she favoured relaxing the rules which had been brought in after the 2008-09 financial crash to split retail and investment banking.
The new regime aimed to shield consumers from any further shocks to the commercial activities of the banks at home or elsewhere in the sector.
Ms Reeves believes the banks have learned from past mistakes and have created a more stable sector. She announced plans for change as part of her “Leeds reforms”. She claimed regulation “still acts as a boot on the neck of businesses”.
However, 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.
“We can’t compromise on basic financial stability and that would be my overall message.”
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