A ring-fence is a virtual barrier that segregates a portion of an individual's or company's financial assets from the rest. This may be done to reserve money for a specific purpose, to reduce taxes on the individual or company, or to protect the assets from losses incurred by riskier operations.
Although the main rate of corporation tax has been set at 19% from 1 April 2017 (which is to reduce further to 17% by 2020) the ring fence Corporation Tax rate applicable to upstream oil and gas profits remains at 30%. Corporation Tax is levied on the profits of all companies carrying on business in the UK.
Redundancy is when an employer reduces their workforce because a job or jobs are no longer needed. However, if you lose your job and they get someone in to fill it that is NOT a redundancy.
Put simply, a suitable alternative role is one where the new role is broadly similar to the existing role that the employee holds. This can be in both job content and terms and conditions.
With the ring-fence in place, the retail side of the bank is now sheltered from the full force of the shock. So your access to savings, loans, and your ability to pay with debit and credit cards is protected.
The financial intermediation process channels funds between third parties with a surplus and those with a lack of funds.
As at January 01, 2020, the UK banking groups that include ring-fenced bodies pursuant to section 142A of the Financial Services and Markets Act 2000 are Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Santander UK, TSB, and Virgin Money UK.
Its headline recommendation was that British banks should 'ring-fence' their retail banking divisions from their investment banking arms to safeguard against riskier banking activities, but it also made a number of other recommendations on bank capital requirements and competition in retail banking.
Ring-fencing is a new regulation that requires the largest UK banks to separate their core retail banking services from their investment banking and international banking activities.
The 2011 report of the UK's Independent Commission on Banking, named after the Commission's chairman Sir John Vickers. Under the ringfencing proposals the capital and the stability of the retail banks would be protected from the claims of creditors of the banks' riskier trading activities.
In response, the Government developed legislation to require UK banks to separate within their groups the provision of core retail services from other activities such as investment and international banking. These requirements are known as ring-fencing.
