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117/08

06 November 2008

Consultation on safeguards for Banking Bill powers

Ian Pearson MP, the Economic Secretary to the Treasury, today launched a consultation on safeguards for exercise of the powers under the proposed Special Resolution Regime (SRR) that would be used to deal with banks in severe financial difficulty. The safeguards - which are set out in draft secondary legislation - aim to increase the effectiveness of, and market confidence in, the ‘partial transfer powers’ under the Banking Bill.

The Economic Secretary said:

"The Banking Bill, introduced into Parliament last month, provides the tripartite Authorities with wide-ranging tools to deal effectively with any failing banks in the future. The Governement has always been conscious that certain safeguards must be provided to ensure market confidence in the use of these powers. Having consulted widely, I am today proposing a set of effective safeguards to be included in secondary legislation, and also consulting on a draft code of practice to provide further information on how the Authorities will use the Special Resolution Regime powers under the Banking Bill.

“This development of this document has been informed by the new Expert Liaison Group for banking that I established last month. I would like to thank them for their positive and helpful contribution to date and look forward to our continued engagement with them on these important issues".

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Notes for Editors

  1. The proposals for safeguards and for a code of practice, build on proposals on these two areas published in the consultation document Financial Stability and depositor protection: special resolution regime, this July.
  2. The Government’s new Banking Bill was introduced into Parliament and received its first reading on 7 October 2008. Second reading was on 14 October 2008.
  3. The Government has, together with the Bank of England and the Financial Services Authority, conducted three rounds of discussion and consultation on the proposals that are contained in the new Banking Bill. Over 200 responses have been received from banks, building societies, insurers and their representative organizations, as well as bodies representing citizens, consumers, workers, businesses, legal and insurance professionals. Responses were also received from international governmental and financial organisations and from academics and individuals.
  4. The expert liaison group, which was announced by the Economic Secretary on 9 October 2008, has been established with a remit to advise the Government on legislation relating to the Special Resolution Regime. Its first role is to advise on the development of these safeguards, and a code of practice. The group includes members of leading financial services trade associations, including the British Bankers’ Association, the Building Societies’ Association, the London Investment Banking Association, the Association of British Insurers, the Investment Management Association and R3, the association of business recovery professionals. The group also includes legal, financial and other technical experts drawn from practitioner firms across the different sectors of the City.
  5. The consultation document ‘Special resolution regime: safeguards for partial property transfers’ is available on the Treasury website.
    The consultation closes on 9th January.

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