Bank reforms must press ahead, says Which?

George Osborne Mr Osborne is due to deliver his Mansion House speech on 14 June

Chancellor George Osborne should resist pressure from banks to reverse planned reforms of the financial sector, consumer group Which? has said.

Mr Osborne is creating a new watchdog that Which? says should protect consumers from "rip-off" charges.

The Financial Services Bill will mean the replacement of the Financial Services Authority by two new bodies.

The British Bankers' Association denied lobbying Mr Osborne and said banks appreciated the need for the bill.

The Financial Services Bill is due before the House of Lords and a banking reform White Paper is due out.

Banks have claimed that the reforms may prompt big financial institutions to leave the UK.

Which? says the government must ensure consumers are sufficiently protected from a recurrence of the banking collapse that led to a costly public bailout.

Executive director Richard Lloyd said: "We have seen intense lobbying from the banks... including a crescendo of scaremongering over recent weeks on the risk of the end of 'free banking' and of big financial institutions leaving the country.

"The chancellor must resist buckling under this pressure."

'Ordinary people'

He said without "strong action" to shake up the banking culture, consumers would continue to pay the price.

The group urged the government to keep "ordinary people" in mind when pushing through its reforms.

The Financial Services Bill will replace the structure - introduced by the previous Labour government - under which oversight is shared between the Bank of England, the Financial Services Authority (FSA) and the Treasury.

Instead, a new Financial Conduct Authority will be established to enforce the effective and fair functioning of markets.

The Financial Policy Committee will be established to look after the general well-being of the UK financial system.

And a new Prudential Regulation Authority will monitor the performance of banks and other companies that manage significant risks on their balance sheets.

The bill will also give the chancellor powers to veto decisions made by the Bank of England when dealing with bank bailouts.

Financial institutions have campaigned against plans to put savers first if a bank becomes insolvent.

'Absolutely right'

The government is also due to publish a White Paper on banking reform, introducing measures to prevent another banking collapse.

Angela Knight, the British Bankers' Association's chief, told the BBC that the banking sector was working with the government to make reforms, not block them.

"We entirely agree that there needs to be changes and we're working very strongly with government on these changes.

"Do customers need protection? Do they need to be put first? That is absolutely right as well.

"There are debates that need to be taken but actually they've got to be taken properly."

Mr Osborne is due to deliver his Mansion House speech on the economy on 14 June.


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  • rate this

    Comment number 47.

    Clearing banks have a captive customer base in that large employers only pay staff by bank transfer. If new legislation enshrined the right to be payed directly for ones labour (ie cash or cheque) many would no longer be forced to use these dodgy corporations as middle men.
    From a customer PoV that would provide all the regulation needed.
    Changing FSA to FCA and FPC? What help is that?!

  • rate this

    Comment number 46.

    There really are very few words to describe the banking sector:



    "legalised theft"
    - a big one has stolen money from me.

    "We will leave the UK" -= idle threat.

    Should we care if they left?

  • rate this

    Comment number 45.

    At 40, presario.

    Well have none of that common sense talk here.

    What a shame the chancellor doesn't see it that way.

  • rate this

    Comment number 44.

    Seeing the aftermath of the banking disaster and the present EU/world crisis there must be a distinct split between retail and casino banking. The casinos can carry on regardless and go bust if they lose. The high street bank can supply services to people with no risks and a small profit. If the gamblers make or lose a lot of money it's all from investors who will be aware of the risks.

  • rate this

    Comment number 43.

    I constantly mismanage my financial affairs, when can I expect my bonus and tax break from the Government?

  • rate this

    Comment number 42.

    Given that recently the government have made a u-turn on so many things announced in the budget where they did not see or compensate for the downside or negative effects of their decisions you do wonder if they really have thought this process through strategically or will we see yet another u-turn as their ill-considered policy goes bad.It's not the banks that need regulating it's the bankers.

  • rate this

    Comment number 41.

    The 'Government' plans are so much eye-wash. Mere window-dressing. They clearly have no intention of proper timely regulation for the city or the banks, but no doubt their proposals will hog the headlines in the tory press.

  • rate this

    Comment number 40.

    Why is everyone so afraid of the possible demise of our banking system?
    Germany does very well concentrating upon production and rewarding those who generate that production. Banking is there to serve that production system.
    This contrast with the UK where production is outsourced to the cheapest supplier whether it be China or India etc i.e. the tail is wagging the dog.
    Reform the banks now.

  • rate this

    Comment number 39.

    Refrom don`t make me laugh, they are reforming the good old conservitave way, moving all the bank debt from the banks to the public and then selling the profitable part of the bank back to there chums ( just look at Norther Rock, 200million loss to the taxpayer and this does not include the toxic assests that we still own and could be as high as 16 billion).

  • rate this

    Comment number 38.

    inchindown: No teacher is worth the outrageous pension and holidays they get and the government should resist the outrageous pressure being put on them by the teaching unions.

    Made a few changes. Much more realistic. This is the free market. The government can't and shouldn't intervene over issues like pay as you want them to.

  • rate this

    Comment number 37.

    What does a banker really do? They all where whisle and flutes to try to look important just to somehow justify their high salaries and bonuses. Reform is absolutely necessary to finally destroy the myth that they are doing something that important. They just rip you off for nothing. We should be giving the higher wages and pensions to doctors, nurses, teachers, etc.

  • rate this

    Comment number 36.

    To paraphrase an old joke; they'll take their parasitism elsewhere?

  • rate this

    Comment number 35.

    As banks total control of peoples money, they must be made more 'people friendly.' That is, those that handle our wages etc must not be allowed to be involved in mortgages, and so called ' high finance' etc. If banks want to fool around in stock markets and lending etc, then let them do it with THEIR money, not ours.

  • rate this

    Comment number 34.

    No banker is worth the outrageous salary and bonuses they get and the government should resist the outrageous pressure being put on them by the banks. But the bankers will still get their millions and the government will cave in. If only they went after bankers with the same vigour they are going after people on benefit. The country is owned and run by the financiers. Accept it and move on.

  • rate this

    Comment number 33.

    john1847So the banks are threatening to move business elsewhere - fine by me. Sweep them away and replace them with community banks which have an interest in investing in their local area.

    Like the Soviet Union. That worked out real well didn't it. I'm sick of all these socialists who don't know how the economy works spouting the tosh about how the bankers are useless and caused the crisis.

  • rate this

    Comment number 32.

    only a fool would not expect the condems to do exactly the same with the banking reforms as they have done with any changes that would make the rich pay closer to their fair share.
    they will go back on them
    They only invent policies that they bring out when stealing ever more from the poor to claim look we are not just hitting you but then go back on all the ones that effect their rich mates

  • rate this

    Comment number 31.

    Why are people believing that patch work will do the trick? Nobody is as blind as those who do not want to see! It is the violation of the Laws of Economics by the present monetary system we have invented creating a build-up of problems that is crushing us more and more. For your information Google “The World Monetary Order to Come”.

  • rate this

    Comment number 30.

    Are the Barclay Bankers leading the protests?

  • rate this

    Comment number 29.

    This stinks of the BPI / Copyright industries fighting the pirate bay. i.e. another group of middle men/gate keepers i.e. the banks, who lets face it the every day person doesn't really need (there are alternatives) demanding left right and center.

    Look we don't want you go away you screwed us over and we are sick of it.

    I miss building societies, they were great.

  • rate this

    Comment number 28.

    So the banks are threatening to move business elsewhere - fine by me. Sweep them away and replace them with community banks which have an interest in investing in their local area.

    Somehow I doubt that this government will do anything to upset their pals in the City - after all where are Cameron and Osbourne going to get their directorships from when they lose the next election ?


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