With HM Treasury’s white paper on banking reform published today, PwC experts are available for comment on the potential implications for the UK banking industry, the wider economy and consumers.

Kevin Burrowes, UK financial services leader, PwC, said:

"Banks will welcome further clarity on the proposed legislation in this white paper. The paper highlights even further the complexity of executing all of this. The government and regulators have a big challenge to get a clear, concise and workable set of laws and guidance in place. The banks face the massive task of implementing, conforming and complying.

“This comes on top of a huge amount of other regulatory changes already being imposed on the banks such as Basel III, the Retail Distribution Review and MiFiD.

“We all want a stable, highly competitive, customer focused UK banking sector. The very heavy burden of all this regulation and the management effort required to address it could potentially make our banks uncompetitive globally. The rapidly growing financial institutions from emerging markets will seek to exploit the opportunities this gives them. "

Steve Davies, UK retail banking leader, PwC, said:

“Part of the original brief of the commission was a focus on improving competition. The steps outlined in the proposals could go further in meeting this challenge. Free banking is an anomaly and a barrier to entry, but banks are likely to need a regulatory push on this to avoid first mover problems. Access to the UK payments infrastructure has also been highlighted as a problem for new entrants. Neither of these two challenges will be addressed in this regulation.

“The ringfencing proposals will help government and regulatory authorities to deal with bank recovery and resolution, and to protect both depositors and UK tax payers in the event of a bank failure. The proposals will not, and was never intended to, prevent such failures from occurring.

“The white paper acknowledges that a ringfence covering purely retail banking would be too narrow. It recognises a difference between investment banking and 'more traditional personal and business lending'. This together with the acknowledgement of the need for limited hedging activities are perhaps some of the most significant changes from the original proposals, although they come with a requirement for additional risk management safeguards for the ringfenced entity.

“Implementing all of the proposals will take time, it could displace management attention on other important issues, and will cost money to put into practice and to sustain, given the capital requirements. However, the end result will be clear divisions of banking activities. The proposed changes allowing banks to engage in simple hedging type activities to support ringfenced customers makes sense and reflects how banks work in practice.”

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