Banking reform: Consumers to get more protection
- 00:01:43
- ITN
Banking reform: Consumers to get more protection
Banks will be subjected to tough new rules to help prevent a repeat of the financial crisis, Chancellor Alistair Darling said. Setting out his White Paper on financial reform to the House of Commons, Mr Darling said banks faced a "back stop" rule to prevent them lending too much. He plans to set up a new Council for Financial Stability as well as forcing banks to hold more capital, and draw up emergency plans for their own demise. The Chancellor also told the Commons the Government would legislate to introduce a national money guidance service, giving consumers "free impartial financial advice" and funded by a levy on the financial sector. He said: "Financial institutions in many countries simply took too much risk. We need a change of culture in the banks and their boardrooms, with pay practices that are focused on long-term stability and not short-term profit." The Council for Financial Stability will bring together the Bank of England, the FSA and the Treasury to deal with immediate issues as well as monitoring system-wide stability and responding to long term risks as they emerge. The Government will also legislate to expand and pre-fund the Financial Services Compensation Scheme and improve depositor protection arrangements. The Financial Services Authority (FSA) will be required to produce an annual report on banks' pay policies. And the FSA will be given a new role in maintaining financial stability, with "tougher powers and penalties against misconduct". Shadow chancellor George Osborne said the proposals in the new White Paper were a "totally inadequate response to what has happened in the last two years".
ITN | July 8, 2009
