HM Treasury, the Financial Services Authority and the Bank of England have put forward proposals designed to help financial stability and depositor protection and enable a more orderly resolution of failing banks. The Special Resolution Regime would provide the authorities with tools to deal with banks that get into financial difficulties including powers to facilitate the rescue of a bank or splitting a bank including a special bank administration procedure.
The ACT supports the objectives but in its response to the public consultation has expressed serious concerns that the contractual rights of creditors of the banks could be unfairly prejudiced. The outcome, were the proposals to be implemented, could be damaging to the reputation and competitiveness of UK financial markets and increase the cost of capital for UK companies.
