LONDON (AFP) - Britain's banking reform Bill cleared its final legislative hurdle late on Monday, paving the way for a raft of new regulations including the "ring fencing" of banks' retail and investment divisions.

A vote in the House of Lords, Britain's upper chamber, rubber-stamped the government's plans for reforming the embattled sector, ending a challenge from the opposition Labour party, which wanted a licensing system on banking standards to be included.

"I am delighted that the Banking Reform Bill has been passed," said Mr Sajid Javid, Financial Secretary to the Treasury.

"This is a major milestone and marks the end of a three year process, led by the government, to make the UK banking system stronger and safer so that it can support the economy, help businesses and serve consumers."

According to Mr Javid, the Bill will ensure that taxpayers are no longer on the hook for future bank failures and will also "help to deliver much need competition" in the sector.

The Bill implements many of the recommendations of the Independent Commission on Banking, set up in 2010 to consider structural reform of the sector following the 2007 crisis.

It will also apply recommendations of the Parliamentary Commission on Banking Standards, which was set up to review standards following last year's Libor revelations.

The scandal erupted when Barclays was fined £290 million (S$594 million) by British and US regulators for attempted manipulation of key interbank interest rates between 2005 and 2009.

The legislation also includes measures allowing bankers to be charged with reckless misconduct if their business fails and will force them to build an "electrified" ring fence between their high-street and investment banking operations.

The Bill is now ready to receive Royal Assent and become law.