The purpose of the Bill is to:
- Strengthen and reform financial regulation, support better corporate governance, and protect and empower consumers.
- Ensure that the financial system that emerges from the crisis is one not only rebuilt on a stronger and sounder footing, but is also one that is fairer and works better for consumers.
The main benefits of the Bill would be:
- More effective regulation and supervision of firms.
- Ensuring that greater emphasis is placed on monitoring and managing system-wide risks – including by legislating to create a Council for Financial Stability.
- Making banking remuneration more appropriate and transparent, with a better link between remuneration and effective risk management.
- Ensuring greater support and protection for consumers of financial products.
The main elements of the Bill are:
- Establishing a new statutory Council for Financial Stability (‘the Council’), to replace the Standing Committee, chaired by the Chancellor and comprising the Treasury, Bank of England and the Financial Services Authority.
- Strengthening the Financial Services Authority, including through providing explicit objectives, formalising its international work, and expanding the remit of the Financial Services Compensation Scheme.
- Taking action, nationally and internationally, on remuneration.
- tougher requirements on systemically important financial firms to set up recovery and resolution plans (ie ‘living wills’), that will make banks safer and easier to wind down in the event of a future crisis.
Protecting and supporting consumers by:
- Enabling the roll-out of a national money guidance service, to be delivered by a new Consumer Financial Education Body.
- The creation of better routes for consumer redress, including enabling a representative to bring an action through the courts on behalf of a group of consumers, and streamlining the FSA’s powers to order a review of past business and secure compensation if there have been legal or regulatory breaches.
- Banning unsolicited credit card cheques, to prevent financial institutions from encouraging customers to borrow more than they can afford.
