Treasury calls for evidence on ring-fencing

Treasury has published a call for evidence looking at the practicalities of aligning the ring-fencing and resolution regimes for banks. The proposals build on the Skeoch review, which found that the benefits of ring-fencing would probably reduce as a bank resolution regime become embedded and that a resolution regime is a more comprehensive solution to addressing the “too big to fail” problem.

The paper looks at how the two regimes might become better aligned without risking financial stability, and specifically seeks views that will inform judgments on:

• the ongoing benefits that ring-fencing provides which the regulatory framework does not otherwise provide; and
• what steps can be taken to better align the regimes without losing financial stability benefits or over-burdening firms with alternative, new regulatory requirements.

Consultation closes on 7 May.