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Responding to the Chancellor of the Exchequer's Mansion House speech, Angela Knight, chief executive of the British Bankers' Association said:
On regulatory reform:
"We welcome the Chancellor's moves to strengthen the system of banking regulation and to make it clearer and more effective. The industry will work with the government to ensure transition between regulatory authorities does not cause disruption to the financial system and is implemented swiftly and well. The UK, and its banks, have already moved further and faster than other major economies on banking reform.
"In transferring the oversight of banks, insurers and building societies to the Bank of England and putting together the regulation of market conduct and consumer protection, the UK is creating a 'twin peak model' which reflects what is also happening in many other countries. We need strong markets and we have to get consumer protection right.
"This now brings certainty into how the industry is going to be regulated in future. The key difference will be the macroprudential responsibility which means that the Bank not only has the powers to raise and lower interest rates but can also take other actions to stop bubbles, such as big rises in house prices.
"The eye must be kept on the ball of good supervision and we must also give confidence to the many overseas banks operating here.
"There are still questions that need to be resolved, such as the relationship between the Monetary Policy Committee and the Financial Policy Committee and how the FPC will be accountable for its actions. Additionally, as there is no equivalent to the MPC interest rate target for financial stability, it will need to exercise considerable judgement over when to intervene."
On the independent commission on banking:
"As part of its remit the banking commission needs to take evidence from around the world. It is clear that other countries are in favour of universal banks and in the crisis they have been the most stable, with the so called narrow banks being the ones that failed most. A modern economy requires banks of all types and sizes. Breaking banks up here would quickly be felt by individuals and companies who would pay more for their mortgages and finance. The major changes that the big banks have already made have reduced the risks but more can be done, and is being done, to bring security in this way through regulation.
"We must pay very close attention to how we are seen from outside the UK. We are a major financial centre and we have to get that message across. We must do it right and not give the impression that we're taking a unilateral leap into the dark."
