Banking Reform Act 2013

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Questions and Answers

What was the focus of the Parliamentary Commission on Banking Standards' fifth and final report?

International cooperation on financial risks

Individual accountability, corporate governance, competition and long term financial stability (correct)

Banking system structure and financial institution solvency

Financial regulation and consumer protection

Who chaired the Independent Commission on Banking?

Andrew Tyrie MP

Sir John Vickers (correct)

The Chancellor

An MP from the opposition party

What was the outcome of the Chancellor's announcement in June 2011?

Nationalization of banks

Separation of high street banks from investment banks (correct)

Increased financial regulation

Removal of capital requirements for banks

What is the purpose of building up high quality capital in financial institutions?

To cover their own losses and prevent insolvency Signup and view all the answers

When did the Financial Services Act come into force?

1 April 2013 Signup and view all the answers

What is the main purpose of the Parliamentary Commission on Banking Standards' report 'Changing banking for good'?

To maintain financial stability and hold individuals accountable Signup and view all the answers

What was the role of the Independent Commission on Banking?

To review the structure of the banking system Signup and view all the answers

What is the goal of the government's financial reforms?

To protect consumers and the economy Signup and view all the answers

What is the main goal of the banking reforms introduced by the government?

To make banks more resilient to shocks and reduce the severity of future financial crises Signup and view all the answers

When was the Banking Reform Act given Royal Assent?

December 2013 Signup and view all the answers

What is the expected outcome of the banking reforms on retail customers?

Retail customers will not be excessively affected when banks make losses Signup and view all the answers

What is the purpose of the structural and cultural changes to the banking system?

To make the financial system more responsive to consumers Signup and view all the answers

What was published in 2012 that set out the government's proposals for reform of the banking sector?

A White Paper Signup and view all the answers

What was the purpose of the consultation on the White Paper that closed in September 2012?

To gather feedback from experts and stakeholders to help develop the draft Banking Reform Bill Signup and view all the answers

What was published alongside the Bill as introduced into Parliament in February 2013?

Banking Reform: a new structure for stability and growth Signup and view all the answers

What was published on 17 July 2013 that sets out draft secondary legislation proposed under the Bill?

Banking reform: draft secondary legislation Signup and view all the answers

Study Notes

Banking Reforms

The biggest reforms to the banking sector in a generation aim to make banks more resilient to shocks, easier to fix when they get into difficulties, and reduce the severity of future financial crises.
The reforms aim to protect retail customers from being excessively affected by bank losses and prevent taxpayers' money from being used to bail out banks.

The Banking Reform Act

The Act received Royal Assent in December 2013 and brings into law structural and cultural changes to the banking system.
The Act will make the financial system more responsive to consumers.

Background

A White Paper on banking reform was published in 2012, setting out proposals for reform of the banking sector based on the Independent Commission on Banking's recommendations.
The consultation on the white paper closed in September 2012, and responses were used to develop the draft Banking Reform Bill.
The draft legislation was scrutinized by the Parliamentary Commission on Banking Standards (PCBS), leading to amendments to the Bill.

Parliamentary Commission on Banking Standards

The PCBS was appointed in July 2012 to consider and report on the draft Banking Reform Bill.
The Commission's fifth and final report, 'Changing banking for good', focused on individual accountability, corporate governance, competition, and long-term financial stability.
The government responded to the report in July 2013 and endorsed the Commission's principal findings, intending to implement its main recommendations.

Independent Commission on Banking

The Independent Commission on Banking was set up in June 2010, chaired by Sir John Vickers, to review and make recommendations on the structure of the banking system.
The Commission published an issues paper, interim report, and final report, recommending separating high street banks from investment banks and making investors pay for investment banks' losses.
The government responded to the Commission's final report in December 2011.

Financial Services Act

The Financial Services Act, which came into force on 1 April 2013, makes fundamental changes to the way financial services firms are regulated.

Global Financial Stability

To safeguard financial stability, financial institutions need to build up enough high-quality capital to cover their own losses and prevent insolvency.
Agreed principles and steps are necessary to allow for timely and orderly resolution of failing institutions.

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Description

This quiz assesses your understanding of the Banking Reform Act 2013, which aims to make banks more resilient and reduce the impact of financial crises on retail customers and taxpayers.