The Chancellor of the Exchequer has launched a consultation on the ‘special resolution regime’ which is designed to reduce the impact of a failing bank. The consultation document is published jointly by HM Treasury, the Financial Services Authority and the Bank of England.
The consultation document builds on previous consultation documents published in January and earlier this month outlining the Authorities’ proposals for financial stability and depositor protection. This technical consultation document sets out further detail on the specifics of the special resolution regime (SRR). It also includes draft clauses for key aspects of the regime, in particular those areas where there has been the most significant interest from stakeholders.
These proposals will now be subject to a further period of consultation, prior to the introduction of legislation later in this Parliamentary session.
“No system of regulation can or should prevent the failure of each and every firm, but we must do everything possible to reduce the impact of problems which could pose a wider threat to stability,” says Alistair Darling. “The challenge is to ensure that the Authorities can act quickly and decisively to take appropriate steps to resolve failing banks. These proposals for a special resolution regime give the Authorities the full range of powers they need.”