Banks set for ‘crucial’ structural changes as reform bill becomes law
The biggest reforms to the UK banking sector since the privatisation of the banks under Margaret Thatcher’s government have been formally approved by the Queen.
The financial services (banking reform) bill, which received royal assent on Wednesday, will implement certain measures in order to protect consumers and customers and ensure that any future losses are absorbed by the banks themselves.
Formal approval was given to the bill by the Queen the day before European ministers reached agreements for a blueprint on a powerful new body which will be given the authority to close banks facing difficulties.
The new measures build on recommendations made by the Independent Commission on Banking Standards, led by Sir John Vickers, which was set up in 2010. The measures include a law which will force banks to ringfence their retail operations from the trading floors, meaning that any future financial meltdown will protect consumers’ cash.
It will also tackle the banking cultures by introducing more rigorous selection processes for banking executives, imposing higher standards embedded within codes of conduct and a new criminal offence for reckless misconduct leading to bank failure.
The Bank of England will be given stronger regulatory and supervisory powers in order to enforce the new rules.
Financial secretary to the Treasury Sajid Javid said, “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.”
“From the outset the government has built a consensus on this issue and this legislation will deliver crucial changes to the structure of banks, ensuring that UK taxpayers are not on the hook for future bank failures.”
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