My dream is a Bank of Hexham or Northumberland working locally, lending locally and ploughing its profits back into the local community.
Sweeping bank reforms begin today with the abolishment of the Financial Services Authority (FSA), which has been replaced with
- the Prudential Regulation Authority (PRA) which will ensure the stability of financial services firms and be part of the Bank of England.
- The Financial Conduct Authority (FCA) is now the City's behavioural watchdog.
The Bank of England has also gained direct supervision for the whole of the banking system
I welcome these changes which should help see an end to boom and bust banking, will help stop disasters like Arch Cru and Equitable Life, and stop the bully banks imposing unfair interest rate agreements on businesses. I have spent 3 years trying to help Arch Cru, Equitable Life and IRSA victims ever since I became MP and I would not want this to happen to anyone else in the future. It has been by far the toughest part of this job that I do.
The regulator changes see the Bank of England - which gains a new governor, Mark Carney, in July - gain much more control over the functioning of the financial system and are the biggest changes to the central bank since it was given its independence in 1997.
The PRA is headed by the central bank's deputy governor Andrew Bailey, and will regulate around 1,700 financial firms. The FCA is headed by Martin Wheatley, who worked at the FSA and was responsible for the review into the Libor rate-rigging scandal at banks.
The FSA was set up 1997 by Gordon Brown, the then-chancellor. But it was roundly criticised for failing to spot the lending boom and subsequent bust and for not curbing the risky trading of banks, which ended up seeing banks like Northern Rock, Royal Bank of Scotland and Lloyds all spectacularly collapse and be bailed out by the taxpayer following the global financial crisis in 2008.
The changes we have brought in over the last 3 years will make it easier
- for small banks to be set up
- with a local slant
- an ability to lend money locally
- and profits going back to that community