The Banking Bill

I mentioned the Queen's speech on Wednesday would announce new rules for banks and this new Code of Conduct.  All of it is wrapped up in a new UK piece of legislation called the Banking Bill, which was introduced to rescue the UK Banking System on 7th October 2008. 

If you're interested to know more about what was said this week in Parliament, here's the details from the Government's website:

The purpose of the Bill is to:

The Banking Bill will strengthen the framework for protecting bank
depositors, enhance financial stability through measures to reduce the
likelihood of banks getting into difficulties, and improve the tools available
to resolve the situation if they do.

 The main benefits of the Bill would be:

The Banking Bill provides permanent measures to enhance the framework for
preventing and resolving situations where banks get into severe difficulty.

The Bill is an important part of the wider set of general measures which the
Government, the Bank of England, and the Financial Services Authority (FSA),
have taken to restore stability to the financial system, including:

· Government provision of financial support to the banking system through the
recapitalisation scheme and credit guarantee scheme;

· the Bank of England’s Special Liquidity Scheme;

· the FSA’s supervisory enhancement programme and other reviews, including of
liquidity regulation and remuneration;

· the increase to £50,000, by the FSA, of the deposit protection limit of the
Financial Services Compensation Scheme (FSCS); and

· leading ongoing international efforts to ensure effective global
coordination of supervision of financial markets.

The special resolution regime (SRR) part of the Banking Bill replaces the
interim powers taken in the Banking (Special Provisions) Act (”the SPA”). In
preparing the permanent replacement to this legislation the Government has
sought to refine and develop the powers in the SPA. The SRR includes new tools
to deal with failing banks.

Other measures in the Bill, including enhancements to the Bank of England’s
role in relation to financial stability and reforms to the FSCS, will enhance
our framework for the future.

The main elements of the Bill are:

· The introduction of a ‘special resolution regime’ to allow the Authorities
(HM Treasury, Bank of England and FSA) to intervene when a bank gets into severe
difficulties. This includes the introduction of two new insolvency regimes for
banks;

· Make changes to the FSCS framework set out in FSMA (Financial Services and
Markets Act) to allow improvements to facilitate faster pay out;

· Formalising and strengthening the Bank of England’s role in maintaining the
UK’s financial stability by giving the Bank a statutory financial stability
objective, establishing a Financial Stability Committee and providing the Bank
of England with additional financial stability tools, such as formal oversight
of payment systems and a key role in the SRR;

· Enabling the Bank of England to lend in a more effective manner, including
by allowing short-term non-disclosure of liquidity assistance by the Bank of
England;

· Enabling the FSA to collect information from banks in difficulties and
removing any impediments to them sharing it with the Bank of England or HM
Treasury, where relevant to maintaining financial stability and with the FSCS to
assist it carrying out its functions; and

· Strengthening the arrangements underpinning banknote issuance by commercial
banks in Scotland and Northern Ireland.