Ex-chancellor slams ICB ring-fencing plans

19 October 2011

Forcing banks to ring-fence their retail operations from their corporate arms would be a big mistake, a former chancellor believes.

Speaking as a member of the House of Lords Economic Affairs Committee, Lord Lawson yesterday (18 October) questioned the wisdom of the recommendations made in the Independent Commission on Banking's (ICB) report on the country's financial sector, reports the Daily Telegraph.

Under proposals put forward by the body - which is headed up by Sir John Vickers - high street financiers would be obliged to separate the funds they hold on behalf of their customers from any external investments.

This, it was stated, would help avoid any repeat of issues that occurred in the global economic downturn when banks were able to use their customers' money elsewhere in their operations.

However, Lord Lawson stated he was "astonished" and "baffled" by this.

"It's a wonderful theoretical model, but I am sceptical of its robustness in the real world," he added.

By Asim Shah

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