A decade has passed since the start of the financial crisis, and ring-fencing is one of the reforms put in place to reduce the likelihood of another one taking place. The new rules require large banks to separate traditional retail banking activities like bank accounts from their potentially risky activities, including investment banking.
The idea is to protect account holders should the bank take a hit from wider problems in the global market, or get into trouble with its investment activities.
The new rules come into force in January 2019, although the process to ring-fence banks has been a number of years in the making. Ring-fencing rules will only apply to the largest banks – those with more than £25 billion in consumer and small business deposits. So if you have an account with a smaller bank, you shouldn't be affected by the new rules.
Building societies like Nationwide are exempt from these rules. We don’t have any investment banking activities.