UK retail banks should be able to offer derivatives to business customers, the government has accepted.

The Law Society has argued to the Independent Commission on Banking and HM Treasury that retail banks should be able to offer derivative products to their business customers.

Law Society chief executive Desmond Hudson said it was a real win for businesses and the wider UK economy which would have been disadvantaged by a less competitive banking environment.

“The Law Society played a crucial role by harnessing expertise from our members who specialise in banking law and providing compelling evidence and robust analysis of the impact of the government’s proposals.”

Following the decision, HM Treasury tasked the Law Society to produce a policy framework paper on how retail banks might offer derivatives whilst also meeting the government’s wider policy objective of increasing stability within the banking sector.

The paper suggested the parameters and protections retail banks may need in order to offer derivatives and was produced in collaboration with the Association of Corporate Treasurers and the British Chamber of Commerce.

The Bill will return to the House of Commons next month where MPs will have a final opportunity to propose amendments to the Bill before it moves onto the House of Lords.