Clare Spottiswoode, a member of the Independent Commission on Banking (ICB), which was set up to advise the authorities on how the future of the banking industry might look made the comments at a meeting in Leeds.
She said that the ICB may suggest that Lloyds should demerge as part of wider concerns that too much power within the financial services industry lies with a small number of large institutions.
âWe might suggest reversing what happened on that day a few months back when Lloyds took over another bank,â Ms Spottiswoode said, referring to its acquisition of HBOS.
The ICB member also called for greater competition within the industry as part of a wider initiative to increase stability.
She said: âWe do not have a very healthy competitive market in financial services. If we have good competition people behave wellâ...âbecause otherwise customers go to a competitor.â
The ICB was set up by the chancellor on June 16th 2010 and is due to make a number of recommendations on how to increase stability within the financial markets by the end of September 2011.
By Jim Ottewill