UK Treasury Puts Forward New Legislation

by Jason Gorringe, Tax-News.com, London

16 May 2008

A Draft Legislative Programme introduced by the UK Government on Thursday has the stated aim of building a more prosperous and fairer Britain - and contains two Bills from the Treasury, on Banking Reform and encouraging saving.

Chancellor of the Exchequer, Alistair Darling, explained that:

"Countries cannot insulate themselves from the global economic challenges, and we have seen over the last few months that the Government has committed to maintaining stability, supporting families and ensuring fairness in the economy".

As part of the government'd commitment to supporting financial stability, HM Treasury, the Bank of England and the Financial Services Authority (FSA) recently consulted on a range of proposals to strengthen depositor protection and deal with banks that get into difficulties. The Government will bring forward legislation on these issues later this year.

The key areas on which the Government intends to legislate include:

• Improvements to the Financial Services Compensation Scheme (FSCS) to facilitate faster pay-out;
• Introducing a 'special resolution regime' to allow the Authorities (HM Treasury, Bank of England and FSA) to intervene when a bank gets into difficulties. This includes the introduction of an insolvency regime for banks;
• Revising the framework for the provision and disclosure of liquidity provision; and
• Providing the Bank of England with a financial stability objective and amending the size and composition of the Bank's Court.

Together these measures will allow the UK Authorities manage any risks to financial stability, protect consumers, and minimise the impact on the economy overall.

The Treasury explained that: "Central to increasing fairness and opportunity for all is ensuring that every British family has access to financial services, financial education and is invested with the ability to save money for the future."

"In line with this aim, the Treasury will also introduce a Bill this Parliamentary session to legislate for the creation of the Saving Gateway - a saving scheme for up to 8 million individuals on lower incomes."

"This will see the Government providing a financial incentive to save and promoting financial inclusion through making a contribution for each pound that people save into the scheme."

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