Banking Reform Act 2013

Banking Reform Act 2013
Short title	Banking Reform Act 2013
Parliament	Parliament of the United Kingdom
Long title	An Act to make further provision about banking and other financial services; and for connected purposes
Introduced by	George Osborne, Chancellor of the Exchequer
Territorial extent	United Kingdom
Dates	Royal Assent: 18 December 2013

Banking Reform Act 2013 is a significant piece of legislation in the United Kingdom that aims to improve the stability and resilience of the UK banking system, as recommended by the Independent Commission on Banking (ICB), led by Sir John Vickers. The Act was introduced by George Osborne, the Chancellor of the Exchequer, and received Royal Assent on 18 December 2013. The legislation is closely related to the Financial Services (Banking Reform) Act 2013 and the Financial Services Act 2012, which were also enacted to regulate the financial sector in the UK. The Act has been influenced by the European Union's Capital Requirements Directive and the Basel III international regulatory framework on bank capital.

Introduction

The Banking Reform Act 2013 was a response to the 2008 global financial crisis, which highlighted the need for more robust regulation and oversight of the banking industry. The Act builds on the recommendations of the Independent Commission on Banking (ICB), which was established by the Coalition Government in 2010, and the Financial Stability Board (FSB), an international body that promotes financial stability. The legislation has been shaped by the experiences of Barclays, Royal Bank of Scotland (RBS), and Lloyds Banking Group, which received significant bailouts during the crisis. The Act has also been influenced by the work of Andrew Bailey, the Chief Executive Officer of the Financial Conduct Authority (FCA), and Mark Carney, the Governor of the Bank of England.

Background

The Banking Reform Act 2013 is part of a broader effort to reform the financial sector in the UK, which has involved the establishment of new regulatory bodies, such as the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). The Act has been informed by the experiences of other countries, including the United States, which has implemented the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the European Union, which has introduced the Capital Requirements Regulation (CRR) and the Bank Recovery and Resolution Directive (BRRD). The legislation has also been shaped by the work of international organizations, such as the International Monetary Fund (IMF) and the Bank for International Settlements (BIS), which have promoted financial stability and banking reform.

Provisions

The Banking Reform Act 2013 introduces several key provisions, including the requirement for systemically important financial institutions (SIFIs) to maintain a minimum leverage ratio of 3%, as recommended by the Basel Committee on Banking Supervision (BCBS). The Act also establishes a new ring-fencing regime, which requires banks to separate their retail banking activities from their investment banking activities, as proposed by the Independent Commission on Banking (ICB). The legislation also introduces new rules on bank governance, including the requirement for banks to have a risk committee and a remuneration committee, as recommended by the Financial Reporting Council (FRC). The Act has been influenced by the work of Sir David Walker, who has promoted corporate governance reform in the UK.

Implementation

The Banking Reform Act 2013 is being implemented by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), which are responsible for regulating the banking industry in the UK. The Act has been phased in over several years, with the ring-fencing regime coming into effect on 1 January 2019, as required by the European Union's Bank Recovery and Resolution Directive (BRRD). The legislation has been influenced by the work of Sam Woods, the Chief Executive Officer of the Prudential Regulation Authority (PRA), and Andrew Bailey, the Chief Executive Officer of the Financial Conduct Authority (FCA). The Act has also been shaped by the experiences of HSBC, Standard Chartered, and Santander UK, which have been subject to the new regulatory regime.

Impact

The Banking Reform Act 2013 is expected to have a significant impact on the banking industry in the UK, by promoting financial stability and reducing the risk of bank failures. The Act has been influenced by the experiences of Iceland, which suffered a major banking crisis in 2008, and Ireland, which received a significant bailout from the European Union and the International Monetary Fund (IMF). The legislation has also been shaped by the work of Lord Turner, who has promoted banking reform in the UK, and Lord Adair Turner, who has written extensively on the topic of financial stability. The Act has been influenced by the G20 and the Financial Stability Board (FSB), which have promoted financial stability and banking reform.

Criticism

The Banking Reform Act 2013 has been subject to criticism from some quarters, with some arguing that the legislation does not go far enough in addressing the underlying causes of the 2008 global financial crisis. The Act has been influenced by the work of Lord Lawson, who has promoted banking reform in the UK, and Lord McFall, who has written extensively on the topic of financial stability. The legislation has also been shaped by the experiences of Northern Rock, which was nationalized during the crisis, and Bradford & Bingley, which was nationalized and later sold to Santander UK. The Act has been influenced by the European Union's Capital Requirements Regulation (CRR) and the Bank Recovery and Resolution Directive (BRRD), which have promoted financial stability and banking reform in the European Union.

Category:United Kingdom banking law