The Federation of Small Businesses has welcomed the recommendations set out by the Independent Commission on Banking on reform of the banking sector.
The Federation of Small Businesses (FSB) has welcomed the recommendations set out by the Independent Commission on Banking (ICB) on reform of the banking sector.
The lobbying group is calling for the recommendations to be in place before the end of this Parliament.
The ICB proposes that banks ring fence their retail operations from riskier investment banking activities.
In a poll of FSB members, 89 per cent believe that the banking system needs reform with 52 per cent calling for implementation to happen immediately and 45 per cent before the end of the current Parliament.
With UK banks holding 85 per cent of the business banking market, the FSB welcomes proposals to open up competition in the sector as seven in ten respondents believe that improving competition would be a key way to reform the sector.
The proposal to create a new bank from the branches from the Lloyds divestiture will open up competition in the long-run and help to put an end to the monopoly of the main banks, says the organisation.
The FSB adds that ring fencing will help to make the structure safer and will protect day-to-day operations and the organisation hopes that this will open up competition as the banks have to look to lending money and attract new customers as the way to make money.
FSB national chairman John Walker says, ‘The recommendations laid out in the report have the potential to make the sector safer and more secure. The government must not water down the proposals and we urge the Chancellor to ensure that they are fully implemented before the end of this Parliament.
‘Each of the main political parties has promised some kind of banking reform and it is what people expect to see. With 89 per cent of small businesses believing that the way the sector works needs to change, it is now imperative that the government makes this happen.’