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Gordon Brown vows tougher bank regulation in new law
November 15, 2009
British Prime Minister Gordon Brown said Sunday that the government will announce new legislation next week to toughen banking regulation and let customers take collective action against errant financial institutions.
In a podcast on the 10 Downing Street Web site, Brown said the government "will ensure that the banking crisis we have experienced over the last two years should never again come at a cost to the taxpayer."
"This means a transformation of the way the financial sector is policed, with banks themselves and not the taxpayer made to pay for bank failings," he said.
Brown said consumers would be empowered "to hold banks to account by taking collective action to get redress when many people feel that they have been badly treated."
Brown said the reforms will be announced as part of Wednesday's Queen's Speech, in which the government lays out its plans for the next session of Parliament.
Treasury Chief Alistair Darling said the Financial Services Bill announced in the speech would give regulators the power to stop bankers from pocketing big bonuses that could destabilize the financial system.
Darling told the Sunday Telegraph newspaper that the bill will allow financial watchdogs to cancel pay packages that reward undue risk-taking.
Darling was quoted as saying that the legislation would give the Financial Services Authority the power to cancel contracts that breach a banking remuneration code agreed by the Group of 20 nations earlier this year. The regulator could fine banks that fail to comply.
"Bonuses have been a symptom of the excessive behavior of some banks over the last few years and even over the last few months," Darling was quoted as saying.
He said he would be "giving the FSA powers if necessary to tear up contracts that would result in payments being made that would cause instability."
The new rules would apply to British banks and to the British operations of global investment banks like Goldman Sachs. They have already agreed to abide by the G20-approved rules, which link bonuses to long-term performance.
The bill must be approved by Parliament before becoming law, and could be derailed if it is not passed before the next national election, which must be held by June. - Sapa-AP
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