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New Banking proposals to give savers more protection

Government proposals due to be announced later are set to give consumers more protection if a bank fails.

The Chancellor is set to unveil a White Paper on banking reforms, following the recommendations made by the Independent Commission on Banking, which was established to look at ways to make the UK banking system safer.

Main proposals include ring fencing High Street retail banking operations from riskier operations including investment banking. Despite this however, George Osborne has considered making concessions to the banks, who were angered by these proposals, which many believe could damage the banking sector and the overall economy.

In a speech he will say: “We’ve got to stop problems here in the City of London spilling onto our High Streets and putting taxpayers’ money at risk.

“I believe that we have found a workable way to solve what I called the ‘British dilemma’ - so we are proposing to protect taxpayers in a way that does not make the UK uncompetitive as a home of global banks.”

The Chancellor will look at broadening the range of activities allowed within ring fenced operations to include hedging tools to protect against interest rate and currency fluctuations, when these are sold alongside small business loans.

This has the potential to cause controversy, as the banks have previously been accused of selling these products.

The White Paper is due for publication around midday.

This was posted in Bdaily's Members' News section by Ruth Mitchell .