Launch of the new Banking Act

Earlier this month it was announced that the new Banking Act is due to come into effect in the UK. Officials have said that the new Act will provide the Bank of England, the central bank, with greater powers of intervention. It means that the central bank will be able to act more quickly when it comes to helping struggling banks and investors, which has become increasingly important in the current financial climate.

Under the new Act the Bank of England will be able to help struggling banks with hidden support to help ensure that their financial stability is maintained. However, not everyone is happy with the new Act, and some critics have said that the secrecy that would surround this intervention could cause problems for consumers and could affect consumer confidence in the banking industry.

The Act would allow for actions taken by the central bank to remain exempt from disclosure under the Freedom of Information Act. In addition it would allow for consumers to receive compensation within a week in the event that a bank collapses. At present this process can take weeks or longer, and this often causes distress and concern for those customers affected.

One banking expert stated: “The idea is that, if there is a bank that gets into trouble, to insulate it and make the wider impact of that less, but I don’t think they can actually stop banks from getting into trouble in the future.” Another official said: “We welcome the new Banking Act and the enhancement it will bring to the regulatory framework, including the strengthening of the Bank of England. However, we need to do more to stimulate growth and restore confidence and trust in the financial sector.”