The UK government has been urged to consider a common legislation, which will force all banks to bifurcate their retail business from riskier investment operations, even if only one bank violates new rules.
The Parliamentary Commission on Banking Standards was quoted by Reuters as saying that the proposed regulation aims to protect taxpayers’ money and force lenders to part their operations.
The commission added that the country’s financial watchdog must be handed over the power to determine at what extent lenders could use their capital for investment and lending.
The commission was assigned to submit its recommendations regarding reformation in banking sector, following an array of banking bailout incidents during the height of financial crisis of 2008 and Libor scandals.
The country is firm to thwart the reoccurrence of banking scandals such as the mis-selling of loan insurance and complex interest rate hedging products to small companies.
The Banking Reform Bill is most likely to be presented in the UK parliament on 11 March for further discussion.
It is expected that almost all the big UK lenders including Barclays, HSBC and Barclays will be affected by the legislation.