Could UK banking reforms backfire on consumers?
The influential Treasury Select committee has today reiterated its call for a radical reform of the UK banking system to prevent similar bailouts in the future. This comes despite the fact that the credit crunch, which eventually led to the worldwide recession, is an event which has only happened on a similar scale once in the last 100 years. There are also concerns that moves to reform the UK banking system could result in UK consumers paying more for credit lines.
Despite the fact that each and every government throughout history has made full use of the UK banking system both for governmental and economic issues, it seems that the banking industry is yet again being painted as the devil in disguise. The recent rush to introduce more layers of regulations, calls to split up influential financial institutions and a requirement for further capital reserves is certain to push up the cost of banking services in the UK. But who will cover this additional cost?
There is no doubt that UK consumers and UK businesses will pay the price for the various changes proposed by governments around the world and the UK government in particular. The opportunity for financial institutions to simply pass on any additional costs to consumers and businesses is there and make no mistake about it, they will use it.
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