My Lords, this amendment brings forward the timetable of the independent review to be held of ring-fencing. As the House will recall, the Government previously amended the Bill to provide for an independent review of ring-fencing, once the
ring-fence has come into force. Following the recommendation of the Parliamentary Commission on Banking Standards, our original amendment provided that the review be conducted no later than four years after the ring-fence had come into effect. This was to allow the ring-fence time to bed down before being reviewed.
The Government have, however, listened to arguments from the Opposition that the review should be held sooner. Two years is a long enough period over which to observe the operation of the ring-fence, and assess its effects. The knowledge that ring-fencing will soon be reviewed may also be a further encouragement to banks to comply faithfully with the ring-fence.
This amendment therefore requires that the independent review of the ring-fence be held within two years of the ring-fencing taking effect, rather than four years. This is a sensible change and one that we hope illustrates the Government’s constructive approach to reasonable suggestions from all sides.