Recommendation 145

We received evidence that the UK’s ring-fencing regime represents a significant threshold for firms to contend with. The UK’s ring-fencing regime is a statutory requirement unique to the UK, introduced after the Global Financial Crisis, that requires firms with a balance sheet over £25 billion to separate their consumer and SME deposit taking arms from their wholesale and investment arms. 215 Sir Howard Davies told us that the process of ring-fencing incurs significant costs: “That was extremely costly to implement. It adds nothing to financial stability and makes UK banks less competitive.” 216 The City of London Corporation echoed this, adding that ring-fenced banks face increased ongoing costs due to regulatory duplication and are at a competitive disadvantage relative to their international competitors: “The ring-fencing framework is unique to the UK and places a burden on firms—other jurisdictions have decided not to use this approach. In particular, there is a burdensome duplication in relation to resolution and operational resilience requirements”. 217