Consultation outcome

A smarter ring-fencing regime: Consultation on near-term reforms

From:: HM Treasury
Published: 28 September 2023
Last updated: 11 November 2024 — See all updates

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A smarter ring-fencing regime: Consultation response

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Detail of outcome

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.

The ring-fencing regime was introduced in 2013 as part of structural reforms to the UK banking sector. This followed recommendations from the Independent Commission on Banking following 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 and SMEs depend from problems elsewhere in the financial system”.

The regime came into full effect on 1 January 2019, and a statutory review of its operation was 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.

Original consultation

Consultation description

The independent review of ring-fencing, chaired by Sir Keith Skeoch, made a series of near-term recommendations to improve the operation of the ring-fencing regime.

The consultation invites views on draft secondary legislation to implement a package of reforms to the ring-fencing regime, that broadly take forward the independent review’s recommendations. The government plans to introduce legislation in Parliament in early 2024, subject to parliamentary time.

This significant package of reforms will improve outcomes for banks and their customers as well as benefit competition and the competitiveness of the UK banking sector. The proposed changes represent a necessary evolution of the ring-fencing regime to make it more flexible and proportionate, whilst maintaining appropriate financial stability safeguards and minimising risks to public funds.

Separately, the government has published a response to the Call for Evidence on aligning the ring-fencing and resolution regimes

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