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Stability Council announced to stave off future crisis

Thursday 19th November 2009

A new Council for Financial Stability including members from the regulator, Treasury and Bank of England was announced yesterday, alongside a raft of other finance measures in the Queen’s speech.

The Queen announced 15 new and draft bills in her speech to Parliament, including several new measures for the City in response to the financial crisis.

Doubts remain over how many of the bills will actually become law considering the time left before an election can be held. But the government can always introduce emergency powers to push bills through.

The new Council will give regulator the FSA more power to police and take action on City pay. The long-awaited Financial Services Bill also contained plans to make banks set up living wills, or plans on how they can be wound down if a crisis hits.

A ban on unsolicited credit card cheques was also announced alongside a national money guidance service. Another measure also made it easier for consumers to bring group court actions against financial institutions.

The British Banker’s Association (BBA) said: "Proposals in the Queen's Speech build on previous announcements and underpin action banks are already taking to address the effects of the worldwide financial crisis and restore public confidence in the industry. We were already aware of many of the proposals and have been working with government, regulators and the Bank of England on the future shape of the industry in the UK.

The trade body added: "At the heart of the relationship between banks and customers is a well educated, financially literate consumer base. Banks are fully committed to financial education and would support moves to refocus and target the estimated GBP 100 million a year they already pay towards financial education. Simply asking the industry to pay more is not the best way to achieve the right result. Banks aim to sort out any problems customers have quickly and effectively but, clearly, redress also plays a part with the courts used only as a last resort.”

Kevin Mountford, head of banking at moneysupermarket.com said: "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 could in reality help consumers and providers co-exist.”

He said given the “ongoing and lengthy activity” surrounding unfair bank charges, any move to give consumers a more efficient way to resolve issues with banks is a good move.

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