GovWire

On 14 October 2024, the Economic Secretary to the Treasury, Tulip Siddiq MP, made a Written Ministerial Statement to Parliament confirming that the government would bring forward legislation to implement reforms to the ring-fencing regime as soon as parliamentary time allows. The Smarter Ring-Fencing Reforms will improve competition and competitiveness in the UK banking sector and support economic growth, while maintaining financial stability.

Thering-fencing regimewas introduced in 2013 as part of structural reforms to the UK banking sector. This followed recommendations from theIndependent Commission on Bankingfollowing the events of the 2007-08 Global Financial Crisis, to separate the retail banking operations of large banks from their international or investment banking activity and insulate vital banking services on which households andSMEsdepend from problems elsewhere in the financial system.

The regime came into full effect on 1 January 2019, and astatutory review of its operationwas conducted by an independent panel of experts led by Sir Keith Skeoch between February 2021 and March 2022. The Skeoch Review made recommendations to improve the operation of the regime in line with its intended objectives. On 28 September 2023, HM Treasury published a consultation on A Smarter Ring-Fencing Regime alongside a draft Statutory Instrument setting out how it intended to implement the recommendations. The consultation closed on 26 November 2023, with responses showing widespread support for the proposed reforms. However, a number of policy and legal issues were also identified by respondents.

The government has reviewed the package of Smarter Ring-Fencing Reforms in light of the views received at consultation stage. This consultation response summarises the responses to the consultation and explains how the government has sought to address the issues that respondents raised. The final Statutory Instrument, reflecting these changes, has been laid in Parliament today.