New Banking Act comes in

The Bank of England is to get new and improved powers under the new Banking Act, which is due to come into force soon, according to a recent report.

The new Act will provide greater intervention powers to the Bank of England when it comes to helping struggling banks, and the central bank will be able to provide hidden assistance to banks and aid investors as part of the Act. It will also be able to intervene more quickly when banks fall into trouble.

Officials supporting the act said that the Bank of England will be able to help maintain financial stability by providing this hidden assistance to banks quickly and effectively. However, critics of the Act have said that this makes the whole process too secretive, and this could prove to cause concern amongst consumers, many of whom have already lost total confidence in the banking industry.

One official said: “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 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.”

Whilst the new Act cannot stop banks from collapsing officials have said that the idea is to provide protection both for banks and consumers, as well as for investors. Amongst the benefits of the Act will be increased speed for getting compensation to savers following the collapse of a bank, and increased speed when it comes to transferring the customers of a collapsed bank to another financial institution.

Tags: Banking Services, enhancement, banking act, regulatory framework, Troubled Asset Relief Program, officials