Re: Sorry High Street Bank
As several people have already pointed out, it's not banning encryption, it's forcing the large companies to give UK gov a backdoor.
The idea is flawed not because it will make encryption illegal, but because keeping a backdoor secret is impossible. Once it is leaked, and it will leak, everybody will have to change their encryption. How disruptive has been replacing insecure SSL/TLS. Backdoors leaking would be much worse than this!
The government will try to make using encryption that does not include a backdoor illegal, and will demonize anybody found using such a system, probably by adding laws to the statute book so that anybody found using encryption that is not readable by the intelligence service will be deemed a terrorist, but even that idea is flawed.
This is because, if they find a data stream or data set on a computer that they don't understand, they will immediately assume that it is obscured by a type of encryption that they've not seen before.
"Hey, I can't make any sense of the data in this /dev/urandom file on your computer. Tell us how to decrypt it or we'll throw you in jail for three months for not revealing the key, and then consider a longer jail sentence for using an encryption method that we can't read"
This is obviously a case to illustrate stupidity, and could be easily challenged in court. By what about seemingly random observation data from things like radio astronomy or applied physics, and if there are rules to allow this type of data to even exist on a computer, how do you prevent steganography - hiding data inside the image or other data.
At some point, people wanting to hide things will resort to book ciphers using unpublished or even published books, which will only be decryptable by knowing the exact book that is being used, or by cataloging all texts ever written. Fortunately, despite Google's best efforts, this is something that will remain impractical for some time.
It's a real minefield that there are no good or consistent ways of regulating.