HM TREASURY News
Release (PN 69/08) issued by The Government News Network on 1 July 2008
Proposals for
strengthening the framework for financial stability and protecting
depositors were published today by HM Treasury, the Financial
Services Authority and the Bank of England.
The proposals build on a consultation document published in
January and will now be the subject of a further period of
consultation, prior to the introduction of leglislation in the autumn.
They focus on five key objectives, which have received widespread
support from stakeholders in the financial services industry and
consumer groups, namely:
* strengthening the stability and resilience of the financial
system - in the UK and internationally;-
* reducing the
likelihood of individual banks facing difficulties - including
regulatory interventions and liquidity assistance;-
* reducing
the impact if a bank gets into difficulties;-
* providing
effective compensation arrangements in which consumers have
confidence; and
* strengthening the Bank of England, and
ensuring effective coordinated actions by authorities, both in the
UK and internationally.
Launching the consultation document, the Chancellor of the
Exchequer, Alistair Darling, said:
"No system of regulation can or should prevent the failure
of each and every institution, but we must do everything possible
to prevent problems which could pose a wider threat to stability.
"The challenge is to ensure that the authorities can act
quickly and decisively where necessary to support financial
institutions. These proposals will give the authorities the full
range of powers they need.
"They do so by entrenching the model established a decade
ago - the FSA responsible for individual institutions, the Bank of
England for the stability of the financial system as a whole - but
by providing each institution with new powers, and improving
coordination between them."
The Chairman of the FSA, Callum McCarthy said:
"We are
working closely with the Treasury and the Bank of England to
strengthen the stability and resilience of the financial system
and reduce the likelihood of banks failing. This legislation is
one of the most important changes of the last decade and its
influence will last for decades to come.
"We will consult later this year on the supervisory aspects
of the new banking resolution regime and for changes to depositor
compensation and will work with our tripartite partners to
implement the new arrangement effectively."
Notes for Editors
1. Financial stability and depositor
protection: further consultation is published jointly by HM
Treasury, the Financial Services Authority and the Bank of England
(the Authorities). This consultation document is available on the
HM Treasury website.
2. The deadline for comments on the consultation document is 15
September 2008, during which time the Authorities will be actively
seeking views and engaging with stakeholders.
3. The Government intends to follow up this consultation by
introducing legislation into Parliament later in this session.