Written evidence to be reported to the House
Banking Bill
4:40 pm
Angela Knight: We do not think that this clause should be there at all, I am afraid, the reason being that the special resolution regime should be paid for by the bank that has got into difficulty. When companies up and down the country get into difficulty, the costs of resolving that problem are paid by that company. We are saying that the compensation scheme is there for depositors—or individuals, because it is broader than just deposit protection—and that to broaden it in this way represents a potentially disproportionate burden. Secondly, the responsibilities for resolution should fall on the failing institutions anyway. Thirdly, the clause could be read as a compensation scheme picking up some of the creditor costs of the failing institutions other than those of just the depositors. It is in all ways wrong: to us, it does not seem to work in principle—the principle should be that the resolution is paid for by the entity that got into difficulty—or in the content.