Ring-fencing

Find out more about ring-fencing and how retail bank customers were affected.

Ring-fencing rules require large UK banks to separate retail banking services from the rest of their business. 

This is to protect you as a customer, and the day-to-day services you rely on, from risks elsewhere in the bank and the wider financial system. 

It reduces the chance that essential banking services, like current accounts, savings accounts and payments, are put at risk by a failure in another part of the business, such as investment banking.

Ring-fencing was one of the important changes brought in by the Government to strengthen the financial system following the financial crisis that began in 2007.

Large UK banks implemented ring-fencing (in some cases with waivers on specific issues) from 1 January 2019.

Ring-fencing only affects the large UK banks

Ring-fencing rules only apply to UK banks with a 3-year average of more than £25bn 'core deposits' (broadly from individuals and small to medium-sized businesses). 

It is these large banks that must 'ring-fence' or legally separate their essential banking services from the rest of their banking group.

Essential banking services are the core services that retail banks offer and include:

  • accepting deposits or other payments into an account
  • offering facilities for withdrawing money or making payments from an account
  • overdraft facilities

How the changes impacted retail bank customers

The changes required by the ring-fencing rules meant that some of the largest banks carried out a restructure to separate their retail banking activities.  

Due to this restructure, some customers had their sort code and/or account number changed. All UK customers affected by ring-fencing have now been contacted and these changes have been completed. 

Where the sort code was changed, banks automatically redirected any payments sent to a customer’s old account to the correct account. Direct debits and many standing orders were also updated by the banks on behalf of their customers.

Protect yourself from fraud 

If you were affected by changes due to ring-fencing, your bank should have already contacted you. If you receive a letter or email appearing to be from your bank relating to ring-fencing, you should be extremely cautious. It could be a scam.

Steps you can take to protect yourself include: 

  • Treat all letters, phone calls, emails and text messages with caution. Don’t assume they are genuine if they claim to be from your bank. It is best to check with your bank using the number on your card or bank statement.
  • Do not give out your account or card details, or make changes to payments unless you are certain who you are dealing with.
  • A genuine bank or organisation will not contact you out of the blue to ask for your PIN, full password or to move money to another account. Never give out your personal or financial details unless it is necessary to use a service that you have requested and given your consent to, and where you trust the provider.
  • Don’t be rushed or pressured into making a decision or acting quickly. A genuine bank or other organisation won’t mind waiting if you want time to think.

Find out more about how to protect yourself from banking and online account scams.

Regulation of ring-fencing

The Prudential Regulation Authority (PRA) is the lead regulator for ring-fencing. It is responsible for identifying which banks are within the scope of the ring-fencing legislation, and for supervising banks’ implementation of the prudential rules. 

We worked with the PRA, the Bank of England, the Treasury and the larger UK banks to support the implementation of ring-fencing. 

More information

If you have any questions about ring-fencing, or concerns about any communications you have received about it, you should contact your bank.