Financial services - today's coalition agreement
An expanded coalition government agreement has been published this morning.
Reform of the regulatory system - FSA to continue to supervise banks and insurers
The Bank of England is to be given control of macro-prudential regulation and oversight of micro-prudential regulation.
It appears that the government will not implement the Conservative's pre-election plan for banks, insurers and other financial institutions to be directly regulated by the Bank of England. It now appears that FSA will continue as the UK's unitary regulator. It remains to be seen how intrusive the Bank of England's "oversight" of FSA's micro-prudential role will be.
Other proposals in respect of financial services include:
•Introduction of a banking levy - with a detailed agreement on implementation.
•Plans for detailed proposals for robust action to tackle unacceptable bonuses in the ﬁnancial services sector.
•Plans for detailed proposals to foster diversity in ﬁnancial services, promote mutuals and create a more competitive banking industry.
•Plans to reduce systemic risk in the banking system and with an independent commission to investigate the complex issue of separating retail and investment banking in a sustainable way; the commission will be given an initial time frame of one year to report.
•Creation of Britain’s first free national financial advice service, which will be funded in full from a new social responsibility levy on the financial services sector.
•Creation of a single agency to take on the work of tackling serious economic crime (including the current work of FSA, SFO and OFT).
•Regulators to be given new powers to define and ban excessive interest rates on credit and store cards
•Seven-day cooling-off period for store cards
•Credit card companies obliged to provide better information to their customers in a uniform electronic format that will allow consumers to find out whether they are receiving the best deal.
•Introduction of stronger consumer protections, including measures to end unfair bank and financial transactions charges.
This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to www.law-now.com.