George Osborne, the Chancellor of the Exchequer, first announced there were to be major changes in the country’s banking system. In a recent speech held at JPMorgan’s operations center, Osborne staunchly stated that new reforms would allow more viable entrance for competitors, expedited transaction processes, regulation watchdogs and a regulated payments system.
Osborne stated, “2013 is the year when we reset our banking system. So the banks work for their customers- and not the other way around. We’ve got a brand new watchdog with new powers to keep our banks safe so they don’t bring down the economy,” reports Banking Technology.
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The reform focuses on consumer choice and regulation. The first amendment, which commenced at the beginning of April 2013, was the replacement of the financial regulatory structure. That reform abolished the Financial Services Authority (FSA), which had been the primary regulator for UK financial services for several years. The government has instead installed the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA), and the Financial Policy Committee (FPC). The PRA will be responsible for overseeing the regulation of financial institutions such as banks and building societies. The FCA will inherit most of the roles that the FSA was responsible for carrying out and the FPC will be look to for serving as a watchdog, monitoring the whole of the financial system.
The government is working on three other concrete plans that should go into effect this coming year. Keeping in mind the importance of consumer choice, they aim to create new rules for banking licenses and liquidity requirements. Ideally these reforms will result in breaking down barrier walls, giving new entrants in the market a chance to compete. Osborne also publicized concrete plans to enforce a separation between retail and investment banking.
“Payments systems sit at the heart of the banking system. They are the hidden from view wirings that operate every time you get wages paid into your bank account, deposit a check or withdraw money from an ATM,” Osborne said. “The Government will bring forward detailed proposals to open up the payment systems. We will make sure that new players in the market can access these systems in a fair and transparent way.”
The government will work on shifting the payments system into a more competition-focused environment, which allows for the regulator to have a stronger influence to give competitor banks access to the payments infrastructure.
With the recent replacement of the FSA and concrete proposals to implement these new regulations by the end of 2013, the general theme of the UK government’s changes seems to be a high focus on consumer choice and easing barriers of entry.
Read the full Banking Technology story here and the full Crowell story here. For more information, check out the official UK Treasury website here.
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