The Financial Services (Banking Reform) Bill was enacted on
The Act is a key part of the Government's plan to create a banking system that supports the economy, consumers and small businesses.
It implements the recommendations of the Independent Commission on Banking, setup by the Government in 2010 to consider structural reform of the banking sector. It delivers the ring-fencing of banks' retail operations from their wholesale and investment operations,, the power to ‘bail in' creditors of a failing bank, and insured depositor preference in the creditor hierarchy.
The Government have also created a new architecture for financial regulation through the Financial Services Act 2012. The Financial Policy Committee in the Bank of England is responsible for protecting and enhancing financial stability, while the Prudential Regulation Authority is responsible for effective regulation of individual firms. The Financial Conduct Authority is responsible for protecting consumers, promoting competition, and enhancing integrity in markets.