Free Essay: UK Treasury Banking Reform Bill
The banking industry is quite demanding to run. There are numerous rules and regulations to abide to always. A lot of changes have taken place in the industry and new reforms are being made on daily basis globally. The UK treasury banking reform bill is one of a kind. Banking reform is a part and parcel of the wider variety of work being taken forward by the government. This includes overhauling the regulatory architecture and work streams on the firmness of investment banks and non-banks and upholding effective competition in the banking industry.
In 2010, the Independent Commission on Banking [ICB] chaired by Sir John Vickers was set up by the UK government chiefly to consider operational reform of the banking sector. The final report was published by ICB in 2011 outlining recommendations for far-reaching and substantial reform of the UK banking industry. The key recommendation of the UK treasury banking reform bill is to create a stable banking sector and protect it against any other financial crisis as well as promote competition in the banking sector in the UK entirely.
On 2012, the UK government published a draft banking bill which was widely acknowledged as the biggest ever renovation of the UK banking system. On 18th December 2013, the banking reform [financial services] act was enacted after receiving a Royal Assent and implementing the recommendation of the ICB and core Parliamentary commission on Banking Standards. The key changes made on the bill include ring-fencing needs for the banking sector, closer regulation of banking executives by establishing new senior management regime and the creation of a new criminal offense for misconduct that may lead to failure of banks.
The UK treasury Banking Reform Bill Act will also introduce a bail-in stabilization option that will form a part of the special resolution regime, enable the Financial Conduct Authority [FCA] to take actions to help limit the cost of payday loans to borrowers and introduce new and better payment systems regulator. The UK Banking Reform Bill Act has also impacted the undertakings of other organizations. In parallel with the UK reforms, the European commission also published a draft regulation on structural measures encouraging the flexibility of EU Banks and Transparency of the financial sector. The act will also reduce the risk and complexity pf large banks in the European Union.
Ring-fencing is a substantial part of the UK treasury Banking Reform Bill and it is essential for regulatory purposes, creating asset protection schemes and segregating into separate income streams for taxation purposes. It gets rid of idea that certain banks will desert a bank of choice in the last recourse. Non-UK banks are not a subject to the ring-fencing regime, but the UK incorporated bank divisions of non-UK banking group with fall within its scope.
Enactment of the UK Treasury Banking Reform Bill has made ring-fencing a workable process. In a sense, the Banking Reform Bill has come with great solutions to many woes that have been affecting many people in the country. New rules of conduct, bail-in and holding decision-makers accountable for any misunderstanding are a few but the core advantages banking service providers and consumers will revel in.
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Sources:
http://blogs.deloitte.co.uk/financialservices/2013/12/the-banking-reform-act-the-curtain-rises.html
http://www.cgsh.com/files/News/e311a0e2-ec4f-4675-b973-1e0d00a70376/Presentation/NewsAttachment/1d136084-0301-4b1b-84bc-1eca500ea814/UK%20Enacts%20Banking%20Reform%20Act.pdf
http://www.betterregulation.com/ie/hot-topic/uk-banking-reform