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Reforming Financial Services

A strong and sustainable financial services sector supports strong, sustainable economic growth. 

Following the most severe financial crisis for 60 years, the Government acted to stabilise the financial sector and is now implementing reforms to improve regulation, support better corporate governance and deliver a better deal for consumers.  The Government continues to work with international partners to reform the international regulatory architecture and strengthen the financial system for the future.

Budget 2010 announces:

• consumers will be given a new right to a basic bank account, following consultation on the details;
• launching the Saving Gateway, where the Government adds 50 pence for each £1 saved by working age people on low incomes, in July 2010;
• agreement with Lloyds Banking Group and Royal Bank of Scotland to lend £105 billion to homebuyers and businesses over the next 12 months;
• a new small business credit adjudicator with powers of enforcement to ensure that small businesses are fairly treated when applying for loans; and
• the key principles to guide work on an internationally coordinated systemic risk tax to ensure that financial institutions make a contribution to the wider costs of financial crises.

The Budget builds on existing measures including:

• a 50 per cent tax on discretionary bonuses above £25,000 awarded to bankers between 9 December 2009 and 5 April 2010;
• the Financial Services Authority’s (FSA) new code of practice on bankers’ pay, which ensures pay reflects long-term performance and can be clawed back;
• improving competition in the banking sector by increasing the number of banks operating on the high street over the next few years as a result of restructuring at RBS and Lloyds and the return of Northern Rock to private ownership; and
• national rollout of the FSA’s Moneymadeclear money guidance scheme offering practical, impartial information and advice on money issues.

The estimated net cost to the taxpayer of financial sector interventions has now been reduced to around £6 billion at current market prices, down from the £20-50 billion range provided at Budget 2009, reflecting greater stability and confidence in the financial sector.

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