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BBA welcomes Financial Services Bill

Banks fully support, and have been working towards, the overhaul of banking regulation in the UK the British Bankers’ Association said as the Financial Services Bill was launched today.

Nia Williams, 27 January, 2012

The BBA said the Bill was an important step forward and that rigorous ground work by parliament and the industry had contributed to proposals which focused on effective, proportionate banking supervision.

British Bankers' Association chief executive, Angela Knight, said: "Banks understand the need for change and have been working closely with government, parliament and regulators to ensure the industry operates in the best interests of the businesses, their shareholders and all their customers.

"Good financial supervision is not just about structure - decisions taken made by bankers and regulators matter too.

"It is vital we take this opportunity to build a system where regulation is both effective and responsive to the challenges we face and can also help attract and retain the best and fittest to the ranks of our regulators.

"Today's publication of the Financial Services Bill is an important milestone in rebuilding trust in the financial services sector.

"There are still many issues to work though and we will continue working with government so the new structures, as they emerge, help supervisors improve their decision-making."

On specific points Mrs Knight said:

Governance of the Bank of England

"The British Bankers' Association believes that greater power requires closer scrutiny. Concentrating regulation at the Bank of England needs to be balanced by stronger governance and accountability. The Court of the Bank of England will need to be ramped up and we are pleased people are now talking about strengthening oversight arrangements in light of the Bank's new responsibilities.

"We also believe the scales of supervision must be better balanced so that the Financial Policy Committee has equal status with the Monetary Policy Committee."

Crisis management

"The British Bankers' Association believes it is vital to bring the Chancellor into crisis management decisions at an early stage – and sooner than the current proposals suggest.

"The Bill has got it right when setting out the responsibilities for all the different crisis management functions but we feel there should be a rethink about the point when the Bank involves the Chancellor to include situations in which the Bank might trigger the Special Resolution Regime.

"The way the financial system copes with crisis also needs to dovetail across the EU so that what happens in the UK is in step with everyone else. Unless we operate the systems in parallel we will end up with two regimes per bank."

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