- Post financial crisis in 2007, ring-fencing was one of several reforms by the Government to strengthen the financial system.
- It reduces the likelihood that essential banking services used by ordinary depositors, like current accounts, savings accounts and payments are put at risk by a failure in another part of the business, such as investment banking.
- Protect customers and day to day banking services from unrelated risks elsewhere in the business.
- Large Banks must legally separate their essential banking services from all other business activity, as example, Investment Banking
- Ringfencing must be fully implemented by 1 January 2019.