Chancellor George Osborne is expected to tell City traders today that the country's largest banks will be broken up if they fail to adhere to new rules.
Under the Chancellor's new proposals, the Government will have the power to completely break up any bank found to be ignoring rules regarding the ring fencing of banks, whereby a bank's retail divisions are separated from its investment business, under the new Prudential Regulation Authority.
The plans have drawn criticism from the banking industry, however.
The British Bankers' Association (BBA) called the proposals "regrettable", with its chief executive, Anthony Browne, declaring: "This will create uncertainty for investors, making it more difficult for banks to raise capital which will ultimately mean that banks will have less money to lend to businesses."
The legislation will be sent to Parliament today and is expected to be law within the next year.
Find out how to choose the best bank account by reading our banking guides.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.