Alistair Darling launches financial market White Paper
The much leaked report on the future of the UK financial markets has today been revealed in depth by the Chancellor Alistair Darling. While the vast majority of the report had been leaked prior to today's announcement there are a couple of elements which have surprised many in the marketplace.
One such surprise has been the government's insistence on a prepaid compensation scheme as opposed to the current system which sees the Treasury loan money to the compensation scheme which is repaid by UK banks as and when used. Under the new scheme the banks will be forced to pay upfront into the Financial Services Compensation Scheme which will significantly impact upon short-term cash flow for many banking operations. This is a fact which has been highlighted by the sector today with many people of the opinion that the UK government is looking to make expansion and risk-taking a thing of the past in the UK financial sector.
The government has also introduced proposals for a total revamp of the regulatory system which would see both the FSA (Financial Service Authority) and the Bank of England share overall responsibility for regulating the sector. The Treasury will also chair a new Council for Financial Stability which will monitor the UK economy and financial markets.
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