Chancellor George Osborne today announced that the Government will support most of the recommendations proposed by the Parliamentary Commission for Banking Standards.
The commission was tasked with investigating how the UK's banking system could be improved following the Libor rate fixing scandal last year.
The main proposals that the Government has agreed to endorse include making it a criminal offence if bankers are found guilty of reckless misconduct, with possible jail time, and bankers' bonuses being deferred for up to 10 years, which would be made repayable if the bank they work for has to be bailed out.
The Government has also shown support for recommendations that a new payments regulator should be set up in order to explore ways to make it easier and faster to switch bank accounts.
However, Mr Osborne said that the Government would not be agreeing to the commission's call for a higher leverage ratio for banks (the amount of capital banks must hold in relation to the amount of lending they conduct) as well as the recommendation that the Government's holding company for its stakes in the Royal Bank of Scotland and Lloyds Banking Group, known as the UK Financial Investments, be abolished.
Mr Osborne did, however, reiterate that the Government is considering splitting RBS into a "good" high street bank, which could then be sold back to the private sector, and a "bad" bank, consisting of all the toxic loans.
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