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Final Report ["Vickers Report"]

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Final Report ["Vickers Report"]

Recommendations

HM Treasury,

15 min read
10 take-aways
Audio & text

What's inside?

British financial experts make their case for sweeping bank reform.

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Editorial Rating

8

Qualities

  • Innovative
  • Overview
  • Background

Recommendation

In 2010, the Independent Commission on Banking received a mandate from the government of the United Kingdom to research and recommend changes to its banking system that would encourage competition and provide greater assurances of financial stability. Economist Sir John Vickers led the commission, which issued its final report after months of study, interviews and consultations with bankers, regulators, financial experts and market participants. The “Vickers Report” points to sweeping changes ahead in the structure and behavior of UK banks. In February 2013, legislators in Parliament introduced the Financial Services (Banking Reform) Bill, which includes several of the commission’s proposals. getAbstract recommends this seminal document for its clear portrayal of a major Western economy’s response to the 2008 fiscal crisis and its recommendations for ensuring the ongoing stability of financial institutions.

Summary

The Ground Rules

The United Kingdom’s Independent Commission on Banking, led by economist Sir John Vickers, recommended financial institution reforms to create a secure, robust banking system that would not require taxpayer assistance in the event of a financial crisis. A reformed banking sector would ensure that the public receives safe, uninterrupted “basic banking services of safeguarding retail deposits, operating secured payments systems, efficiently channeling savings to productive investments and managing financial risk.”

To that end, healthy competition among banks is a must, and any alterations in the industry must be “procompetitive.” In addition, proposed changes must accommodate the UK’s role “as a pre-eminent center for banking and finance.” Its banks’ domestic operations must be strong, steady and well regulated, and they also must respect international rules. Proposed shifts in UK bank operations can affect European and global finance, and thus contribute to global fiscal stability.

Regulatory Remedies and Loss Absorbency

The 2008 financial crisis rocked the UK banks’ international and domestic operations and revealed supervisory failures...

About the Author

The UK government set up the Independent Commission on Banking in June 2010 in order to study and recommend bank reforms. Economist Sir John Vickers was the commission’s chairman.

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