What does the Queen’s Speech mean for you?

Government plans for the financial services sector were outlined in The Queen’s Speech today.

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The economy was described as being the ‘over-riding concern’ for the Government with a range of plans currently being pushed through Parliament in the Banking Reform and Savings Gateway Bills.

What has been outlined today?

  • Protection for depositors - Legislation will ensure fairer and more secure protection for bank depositors and to improve the resilience of the financial sector, and improve the Financial Services Compensation Scheme (FSCS) to facilitate faster payouts.

  • Saving Gateway Accounts - As announced in the pre-budget report last week, Savings Gateway Accounts will be rolled out across the country to enable people on lower incomes to save more by offering financial incentives. The accounts will pay 50p per £1 saved up to certain limits (not yet announced) and will only be available to those on low incomes.

  • Special Resolution Regime - The new regime will allow the authorities (HM Treasury, Bank of England and Financial Services Authority) to intervene when a bank gets into severe difficulties. This will includes the introduction of an insolvency regime for banks, and the Bank of England will be able to provide short-term funding to banks in trouble without it having to be publicly disclosed.

Will it make a difference to you?

Kevin Mountford, head of banking at moneysupermarket.com said: “The Banking Bill and Savings Gateway Bill outlined in the Queen’s Speech today include some features that will genuinely help consumers, and offer stability to the financial services sector.

“However, the fact remains that none of these measures go beyond what is entirely necessary, and in some cases more can be done. The Savings Gateway Accounts will encourage more people on lower incomes to save, but we need measures that encourage everybody, including those on average and above average incomes.”

The Banking Code

In addition to The Queen’s Speech Prime Minister Gordon Brown is also expected to announce today that the Banking Code will fall under statutory regulation. The code is currently voluntary although the vast majority of banks operating in the UK are already signed up. Making the code statutory would give the authorities greater powers of redress than they already have.

Mountford added: “I’d support this as the Banking Code to date is in some ways a toothless tiger. But the question is whether this will simply add another layer of regulation that doesn’t differ from current statutory controls already imposed by the Financial Services Authority. If this move doesn’t offer consumers more protection, then it is simply another cost on the industry.”

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