Banking reform: Andrew Tyrie vs George Osborne At first glance, the Chancellor will be relieved that the report has eschewed a direct call for lenders to be split up, however, a quick skim of the document reveals a report that has thrown down the gauntlet on bank reform. Gone is the passive ring-fence recommended by Sir John Vickers" Independent Commission on Banking and in its place, Mr Tyrie has called for its "electrification." Sceptical about their fellow politicians and the lobbying of the banking industry, the Commission's members suggest handing regulators, under the direction of the Treasury, the power to force in future the full separation of banks if the ring-fence proves inadequate to safeguard the financial system. The testimony of Bank of England executive director Andy Haldane is understood to have been crucial in persuading the Commission to suggest this controversial device. Mr Haldane, an outspoken and frequent critic of the banking industry, was clear in his evidence that he was "attracted to the idea" of putting such a reserve power on the statute book to keep lenders honest. The Commission has proposed souping up Sir John's recommendation on leverage, taking away the ability of banks to use their own internal models to gauge the risk they are taking and instead putting in place a system that would force banks to use a far more blunt and inflexible leverage ratio. The Commission has also said it will look at whether Britain should adopt some form of the Volcker Rule that will prevent US banks from undertaking proprietary trading. Mr Osborne had been clear in warning the Commission not to "unpick" what he termed the "consensus" on bank reform, but from the evidence of the report its members are far less sure than the Chancellor that such a consensus even exists. "Next year, the Commission will also be looking at, and reporting on, what contribution changes in areas such as competition, corporate governance, supervision and regulation and the civil and criminal law could make to enhancing standards and culture in banking," said Mr Tyrie. With its final report a couple of months away, the commissioners have prepared the ground for even more consensus unpicking proposals. The spate of recent banking scandals has brought into focus the new question of "too big to jail," whereby large banks are effectively immune from prosecution due to the systemic impact criminal charges could have. Mr Tyrie said the Commission would be looking at the "orange jump-suit question," as it examines what form of sanctions could be imposed on bankers that fall foul of its proposals. Finally, the Commission has marked out its right to oversee the detailed secondary legislation that will likely provide the most important filler on how banks are able to operate in future. The report frequently refers to the lack of information to which the commissioners felt they had access when assessing the Bank Reform Bill and it is clear they do not intend to hand Mr Osborne and the Treasury a blank cheque to put in place whatever reforms they want to once their final report is published.