George Osborne will tell high streets banks tonight that they must ring-fence their retail operations in order to protect consumers from their investment banking dealings.

It is widely expected that the Chancellor will use his Mansion House speech tonight to back the proposals in the Interim Report from Independent Commission on Banking (ICB).

The Commission, chaired by Sir John Vickers, proposed in April that banks’ retail operations should be ring-fenced from investment banking in order to protect consumers and prevent taxpayers from having to bail out investment banking failures.

Vickers has also proposed that banks would be rehired to hold more capital. It is not yet understood what Osborne will says on this.

It is however believed that he will also announce his intention to sell Northern Rock.

Peter Vicary-Smith, Which? chief executive, said: “This reform should ensure that consumers’ money is better protected and that we’re less likely to face a situation where taxpayers foot the bill for the failures of the banking system.