The Chancellor of the Exchequer George Osborne today announced that Sir John Vickers will chair the Independent Commission on Banking.
The Independent Commission on Banking will formulate policy recommendations with a view to:
- Reducing systemic risk in the banking sector, exploring the risk posed by banks of different size, scale and function;
- Mitigating moral hazard in the banking system;
- Reducing both the likelihood and impact of firm failure; and
- Promoting competition in both retail and investment banking with a view to ensuring that the needs of banks’ customers and clients are efficiently served, and in particular considering the extent to which large banks gain competitive advantage from being perceived as too big to fail.
The Commission will make recommendations covering:
- Structural measures to reform the banking system and promote stability and competition, including the complex issue of separating retail and investment banking functions; and
- Related non-structural measures to promote stability and competition in banking for the benefit of consumers and businesses.
The Commission will also have regard to the Government’s wider goals of financial stability and creating an efficient, open, robust and diverse banking sector, with specific attention paid to the potential impact of its recommendations on:
- Financial stability;
- Lending to UK consumers and businesses and the pace of economic recovery;
- Consumer choice;
- The competitiveness of the UK financial and professional services sectors and the wider UK economy; and
- Risks to the fiscal position of the Government
The Government will announce the full membership of the Independent Commission shortly, which will require a well-balanced set of skills and experience, covering banking, business, competition, consumer issues and regulation.
The Commission will produce a final report by the end of September 2011. The Commission will report to the Cabinet Committee on Banking, chaired by the Chancellor of the Exchequer George Osborne, with Secretary of State for Business, Innovation and Skills Vince Cable as Deputy Chair.
Chancellor of the Exchequer George Osborne:
The worst financial crisis in living memory highlighted the significant detrimental impact that failure in the financial sector can have on the real economy and the public finances. We need a proper debate about the future structure of banks, the relationship between retail and investment banking, and the question of how to ensure greater competition in the banking industry. The Coalition Government will deliver on its promise to establish an independent Commission on Banking and I am delighted to announce that Sir John Vickers will chair the commission. He has the experience, integrity and independence required to lead this debate.
Notes for editors
The exact wording the Programme for Government is as follows:
- We will take steps to reduce systemic risk in the banking system and will establish an independent commission to investigate the complex issue of separating retail and investment banking in a sustainable way; while recognising that this will take time to get right, the commission will be given an initial time frame of one year to report.
- We want the banking system to serve business, not the other way round. We will bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry.
Sir John Vickers is Warden of All Souls College, Oxford. He was educated at Oriel College, Oxford. From 1991 to 2008 he was Drummond Professor of Political Economy at the University of Oxford. He was Chief Economist of the Bank of England and served on the Bank’s Monetary Policy Committee from June 1998 to September 2000, and then head of the Office of Fair Trading until 2005.
HM Treasury has published a Terms of Reference document for the Independent Commission on Banking.
Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to firstname.lastname@example.org
Media enquiries should be addressed to the Treasury Press Office on 020 7270 5238.