Miliband sounds warning note on banks Ed Miliband has sent a warning signal to the banking industry by raising the prospect of a future Labour government carrying out a full separation of retail and investment banking in the UK. In an interview to mark the start of Labour's annual conference, the party leader said he favoured a modern-day equivalent of the 1933 Glass-Steagall act which split US banks along similar lines. At first glance the remarks may appear to be a bombshell for Britain's biggest industry, which has resisted such proposals in the wake of the credit crunch, warning that the changes could be costly and disruptive. Labour is increasingly seen as having a good chance of forming the next government as it currently has a substantial lead over the Tories in the opinion polls. But Mr Miliband's comments in the Observer newspaper are likely to be pored over by the industry to deduce whether they are more of a political point than a clear policy marker. One party aide described the interview as a "warning shot" rather than a concrete policy promise. The ambiguity lies in the fact that the coalition government is already proceeding with a separation of retail and "casino" banking, albeit through ring-fencing within individual banks. Legislation should reach the statute book in 2015 although separation will not be completed until 2019. Labour is not committing itself to ripping up this legislation and replacing it with tougher laws - at least not at this point. Instead the party is trying to put pressure on the coalition to implement the full, tougher recommendations of the Vickers report into banking. "Either they can do it themselves - which is frankly not what has happened in the past year - or the next Labour government will, by law, break up retail and investment banks," said Mr Miliband. The banks and the government can change direction and say they are going to implement the spirit and principle of Vickers to the full. That means the hard ring-fence between retail and investment banking. We need real separation, real cultural change. Or we will legislate.