Bank Stability Reforms: Tories

Bank Stability Reforms: Tories

The Conservatives have publishing their "plan for sound banking" proposing huge changes in how the Banking industry is governed to prevent another financial crisis.  

The proposals broadly suggest that the Bank of England would be given much greater power to regulated and oversee how Banks operate in addition to intervention.  

This is very different to the ‘tri-party’ coalition of the Financial Services Authority, the Bank of England and the Government (via the Treasury) that Labour prefers.  The Tories suggest the tri-party route means no one takes responsibility for failure, as appears to be the case right now.

Proposed Banking Reforms

• Bank of England responsible for stability, much in the same way they are responsible for interest rate setting i.e.  no Government intervention.

• Bank of England responsible for controlling Bank bonuses and pay structure to reduce bankers taking unnecessary risks

• Investigating the effects of bank mergers on competition and whether there is or will be consumer detriment as a result.

• Replace the Financial Services Authority with a Consumer Protection Agency
  

Huge Punishment for FSA

We suggest this is a huge ‘slap in the face’ for the industry regulator the Financial Services Authority (FSA).  

• Banking regulation taken away

• FSA to be replaced by a Consumer Protection Agency
  

How much this will improve things remains to be seen.  We suggest it may only mean the same personnel working in a different guise i.e.  the name of the department will change.  Unless there is a huge move to bring in suitable external consultants to offer expert advice at all points of the financial services spectrum, we suggest any new agency will likely make the same errors.

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