HM Treasury

Financial services

Financial Services Bill

On 19 November 2009 the Chancellor of the Exchequer, Alistair Darling, introduced the Financial Services Bill into Parliament. The Bill builds on the decisive action taken by the Government over the past year in response to the financial crisis, and delivers wide-reaching reforms that strengthen financial regulation, support better corporate governance and empower consumers.

The Bill makes provision for a new Council for Financial Stability that will focus on managing systemic risk and protecting financial stability, both in the UK and internationally. The Council will be chaired by the Chancellor and will include the Chair of the Financial Services Authority (FSA) and the Governor of the Bank of England. The attached Terms of Reference provide a draft statement with respect to how the Council will perform its role, to inform understanding of the Bill and provide greater clarity on the operation of the Council. The statement is a draft of that provided for under clause 1(5) of the Bill.

Scheduling of Quarterly Minuted Meetings

Meeting

Report

Winter

Bank of England’s Financial Stability Report

Spring

FSA’s Financial Risk Outlook

Summer

Bank of England’s Financial Stability Report

Autumn

Council for Financial Stability Annual Report

As well as discussing these reports, the Council's agenda will include key international and domestic strategic issues, such as remuneration, recovery and resolution plans, and capital regimes.

Background

The Financial Services Bill will enact a wide range of proposals to ensure that the financial system that emerges from the crisis is rebuilt on a stronger and sounder footing, and is fairer and works for consumers. Many of these proposals were set out in the ‘Reforming financial markets’ paper published by the Government in July 2009. The paper presents the Government’s analysis of the causes of the financial crisis and sets out a series of proposals for reforming and enhancing financial market regulation and consumer protection.

The Government asked for views in relation to specific proposals for primary legislation as well as more general areas for discussion. More than 100 responses were received, and meetings and workshops held with a wide range of stakeholders. The Government’s subsequent analysis is set out in its response to the consultation.

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