The Government wants to see whether large, complex lenders should be forced to separate low-risk banking activities from high-risk activities.
The Committee will call for submissions and evidence on whether the structure of the current financial system should be reformed and certain activities should be regulated.
It will ask questions about the interconnectedness of banks, tackling issues such as inter-bank lending, risks to consumers and public confidence in the system.
A statement from the Treasury said there was a need to prevent against the Government being forced to authorise a massive injection of public funds to rescue ailing financial institutions.
It added: “The need to prevent this is due to cost to the public but also due to the assumption that Governments will step in to support institutions that are simply ‘too important to fail’ may
drive excessive risk-taking.”
Fahim Antoniades, group director at Mortgage Centre IFA, welcomed the inquiry, adding that the financial crisis had exposed vulnerabilities in the banking sector.
