Bank reforms could hit credit card firms
By UK CreditCards.com
Major changes affecting UK credit card providers have been recommended by the governor of the Bank of England.
Mervyn King said that the current regulatory system, which allows large financial firms to maintain both retail banking and investment banking units, could be seen as "impractical."
If adopted, the reforms would see low-risk financial operations, such as high street banks providing savings and current accounts and credit cards, run as separate entities to investment banks trading in high-risk financial products.
The Bank governor added that financial firms that had received bailout money from the government due to the credit crunch should also limit their exposure to risky investments.
"It is important that banks in receipt of public support are not encouraged to try to earn their way out of that support by resuming the very activities that got them into trouble in the first place," he said.
Responding, Angela Knight of the British Bankers' Association said that firms offering "mixed banking" should not be broken up. "We believe the key issue is not one of breaking up banks but of financing the economy," she said.
Mr King made the comments in a speech in Edinburgh on Oct. 20.
Published: 22 October 2009
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