The UK Banking Reform
The global economic crisis which began in 2007, led to a host of regulatory reforms across the financial services industry designed to protect the taxpayer and the wider economy in the event of another crisis. A number of the reforms require changes to the structure of banking groups so that, in the event of severe financial stress an institution can be recovered or, in financial failure, swiftly resolved.
In 2013, legislation was passed in the UK requiring that certain universal banks in the UK such as HSBC, which offer personal, commercial and investment banking services, separate, or ring-fence, their UK retail and commercial operations from wholesale or investment banking activity. As a consequence, the HSBC Group is required to make certain structural changes in the UK.
The Financial Services (Banking Reform) Act 2013 (the Banking Reform Act) is a key part of the UK government’s plan to create a banking system that supports the economy, consumers and small businesses. The Banking Reform Act implements the recommendations of the Independent Commission on Banking, set up by the government in 2010 to consider structural reform of the banking sector. It also implements key recommendations of the Parliamentary Commission on Banking Standards, which was asked by the government to review professional standards and culture in the banking industry.