UK Politics

Banking reforms become law after getting Royal Assent

Man withdrawing cash from ATM
Image caption Retail and investment operations of the same bank will be required to have separate boards, balance sheets and remuneration schemes

Reforms to the UK banking sector aimed at making it more resilient after the 2008 financial crisis have become law.

The Financial Services Bill was given Royal Assent on Wednesday after being approved by Parliament earlier.

It requires banks to ring-fence High Street operations from more high-risk investment banking businesses and gives regulators the ultimate power to split banks up to safeguard their future.

Ministers say it will make the banking sector "stronger and safer".

Ministers say the new act, which will also for the first time make senior managers liable for criminal prosecution for reckless misconduct, will make the banking industry more resilient and competitive.

The bill implements many of the recommendations of the 2011 Vickers independent commission on banking.

Among other changes, the legislation will give insured depositors preference if a bank enters insolvency and require banks, if necessary, to raise more capital to absorb losses.

"This is a major milestone and marks the end of a three year process, led by the government, to make the UK banking system stronger and safer so that it can support the economy, help businesses and serve consumers," Treasury minister Sajid Javid said.

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