Independent Commission on Banking Final Report
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House of Commons Treasury Committee Independent Commission on Banking Final Report Oral and Written Evidence Ordered by the House of Commons to be printed 10, 18 and 26 October 2011, 2 and 23 November 2011, 14 December 2011, 11 January 2012, and 30 October 2012 HC 680 [Incorporating HC 1534, Session 2010–12] Published on 12 November 2012 by authority of the House of Commons London: The Stationery Office Limited £18.50 The Treasury Committee The Treasury Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of HM Treasury, HM Revenue and Customs and associated public bodies. Current membership Mr Andrew Tyrie MP (Conservative, Chichester) (Chairman) Mark Garnier MP (Conservative, Wyre Forest) Stewart Hosie MP (Scottish National Party, Dundee East) Andrea Leadsom MP (Conservative, South Northamptonshire) Mr Andy Love MP (Labour, Edmonton) John Mann MP (Labour, Bassetlaw) Rt Hon Pat McFadden MP (Labour, Wolverhampton South West) Mr George Mudie MP (Labour, Leeds East) Mr Brooks Newmark (Conservative, Braintree) Jesse Norman MP (Conservative, Hereford and South Herefordshire) Teresa Pearce MP (Labour, Erith and Thamesmead) David Ruffley MP, (Conservative, Bury St Edmunds) John Thurso MP (Liberal Democrat, Caithness, Sutherland, and Easter Ross) Michael Fallon MP (Conservative, Sevenoaks) was also a member of the Committee during the inquiry. Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/treascom. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in printed volume(s). Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are Chris Stanton (Clerk), Lydia Menzies (Second Clerk), Jay Sheth, Adam Wales (Senior Economists) and Matthew Manning ((on secondment from the Financial Services Authority)(Committee Specialist)), Alison Game (Senior Committee Assistant), Steven Price and Lisa Stead (Committee Assistants) and James Abbott (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Treasury Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5769; the Committee’s email address is [email protected] List of witnesses Monday 10 October 2011 Page Sir John Vickers, Chair Martin Taylor, Bill Winters, and Martin Wolf, ICB Commissioners Ev 1 Tuesday 18 October 2011 Mr John Hitchins, Senior Banking Partner, PricewaterhouseCoopers LLP, Mr John Grout, Policy and Technical Director, Association of Corporate Treasurers, and Mr Matthew Fell, Director, Competitive Markets, CBI Ev 22 Mr John Kay, Cass Business School, and Dr Peter Hahn, Cass Business School Ev 30 Wednesday 26 October 2011 Andy Caton, Corporate Development Director, Yorkshire Building Society, Graham Beale, Chief Executive, Nationwide, and Chris Rhodes, Group Product & Marketing Director, Nationwide Ev 39 Wednesday 2 November 2011 Peter Vicary-Smith, Chief Executive, Dominic Lindley, Principal Policy Adviser, Which?, Christine Farnish, Chair, Consumer Focus, and Gillian Guy, Chief Executive, Citizens Advice Ev 49 Wednesday 23 November 2011 Stephen Hester, Chief Executive, Royal Bank of Scotland, and Douglas Flint CBE, Group Chairman, HSBC Ev 56 Ana Botín, Chief Executive, Santander UK, and Tim Tookey, then Interim Group Chief Executive, Lloyds TSB Ev 73 Wednesday 14 December 2011 Peter Sands, Group Chief Executive, Standard Chartered Bank Ev 82 Bob Diamond, Chief Executive, and Antony Jenkins, Chief Executive, Retail and Business Banking, Barclays plc Ev 89 Wednesday 11 January 2012 Rt Hon George Osborne MP, Chancellor of the Exchequer, and Tom Scholar Ev 100 List of written evidence 1 Lloyds Banking Group Ev 116, 137 2 Nationwide Building Society Ev 120 3 Consumer Focus Ev 122 4 Association of Corporate Treasurers Ev 127 5 Royal Bank of Scotland Ev 130, 134 6 Barclays plc Ev 130, 150 7 Letter from Tim Tookey, then interim Group Chief Executive, Lloyds Banking Group, to the Chairman of the Committee Ev 136 8 Standard Chartered Ev 138 9 Campaign for Community Banking Services Ev 153 10 The Finance and Leasing Association (FLA) Ev 155 11 Unite the Union Ev 156 12 Building Societies Association Ev 158 13 Financial Services Consumer Panel Ev 161 14 Institute of Chartered Accountants in England and Wales Ev 164 15 Confederation of British Industry Ev 168 16 British Bankers’ Association Ev 171 17 Payments Council Ev 176 18 C. Hoare and Co. Ev 177 List of Reports from the Committee during the current Parliament Session 2010–12 First Report June 2010 Budget HC 350 Second Report Appointment of Dr Martin Weale to the Monetary Policy HC 475 Committee of the Bank of England Third Report Appointment of Robert Chote as Chair of the Office for HC 476 Budget Responsibility Fourth Report Office for Budget Responsibility HC 385 Fifth Report Appointments to the Budget Responsibility Committee HC 545 Sixth Report Spending Review 2010 HC 544 Seventh Report Financial Regulation: a preliminary consideration of the HC 430 Government’s proposals Eighth Report Principles of tax policy HC 753 Ninth Report Competition and Choice in Retail Banking HC 612 Tenth Report Budget 2011 HC 897 Eleventh Report Finance (No.3) Bill HC 497 Twelfth Report Appointment of Dr Ben Broadbent to the monetary Policy HC 1051 Committee of the Bank of England Thirteenth Report Appointment of Dr Donald Kohn to the interim Financial HC 1052 Policy Committee Fourteenth Report Appointments of Michael Cohrs and Alastair Clark to the HC 1125 interim Financial Policy Committee Fifteenth Report Retail Distribution Review HC 857 Sixteenth Report Administration and effectiveness of HM Revenue and Customs HC 731 Seventeenth Report Private Finance Initiative HC 1146 Eighteenth Report The future of cheques HC 1147 Nineteenth Report Independent Commission on Banking HC 1069 Twentieth Report Retail Distribution Review: Government and FSA Responses HC 1533 Twenty-first Report Accountability of the Bank of England HC 874 Twenty-second Report Appointment of Robert Jenkins to the interim Financial Policy HC 1575 Committee Twenty-third Report The future of cheques: Government and Payments Council HC 1645 Responses Twenty-fourth Report Appointments to the Office of Tax Simplification HC 1637 Twenty-fifth Report Private Finance Initiative: Government, OBR and NAO HC 1725 Responses Twenty-sixth Report Financial Conduct Authority HC 1574 Twenty-seventh Report Accountability of the Bank of England: Response from the HC 1769 Court of the Bank Twenty-eighth Report Financial Conduct Authority: Report on the Governments HC 1857 Response Twenty-ninth Report Closing the tax gap: HMRC’s record at ensuring tax HC 1371 compliance Thirtieth Report Budget 2012 HC 1901 Session 2012–13 First Report Financial Services Bill HC 161 Second Report Fixing LIBOR: some preliminary findings HC 481 Third Report Access to cash machines for basic bank account HC 544 holders Fourth Report Appointment of Mr Ian McCafferty to the Monetary HC 590 Policy Committee Fifth Report The FSA’s report into the failure of RBS HC 640 cobber Pack: U PL: COE1 [SO] Processed: [09-11-2012 15:02] Job: 017688 Unit: PG01 Source: /MILES/PKU/INPUT/017688/017688_o001_db_TC 10-10-11 corrected.xml Treasury Committee: Evidence Ev 1 Oral evidence Taken before the Treasury Committee on Monday 10 October 2011 Members present: Mr Andrew Tyrie (Chair) Tom Blenkinsop John Mann Michael Fallon Mr George Mudie Mark Garnier Jesse Norman Stewart Hosie Mr David Ruffley Andrea Leadsom John Thurso ________________ Examination of Witnesses Witnesses: Sir John Vickers, Chair, ICB, Martin Taylor, ICB Commissioner, Bill Winters, ICB Commissioner, and Martin Wolf, ICB Commissioner, gave evidence. Q1 Chair: Thank you very much for coming before Q4 Stewart Hosie: Sir John, you have said that the us and for the huge amount of work that all of you annual pre-tax cost to banks of the actual reforms have done, and one of you missing, on a very would be in the £4 billion to £7 billion range. Was that complicated subject of enormous importance to the an in-house analysis or was it an average of external country at the moment, and indeed well beyond these analyses? How did you come to that figure? shores. Before we get into some of the meat of the Sir John Vickers: Yes, what we have said is that our report itself—and you have had from us a list of best estimate would be within that range. There is a questions that we had for the interim report, which I lot of uncertainty around that however. The evidence think to some degree will serve as a basis for these that went into formulating that estimate is a mix of exchanges—could you say whether you are happy things. A number of City analysts, particularly in the with the fact that Moody’s downgraded our banks, summer, produced their own estimates, which we apparently in response to your report? were able to look at and study and assess their Sir John Vickers: Thank you very much, Chairman. methodologies and so on. We also had data provided May I just place on record, on behalf of the to us on a confidential basis by the banks so we could Commissioners, our thanks to the secretariat who compare and add that other evidence to the evidence worked with us, who were absolutely magnificent in pot that we had available. It was a combination of our all their work? We would never have been able to put survey of external work, together with our own this together without that.