New banking regulations outlined in Queen's Speech

The Financial Services Authority (FSA) will be given greater power to regulate banks thanks to new legislation outlined in the Queen’s Speech today (November 18th).

Under the terms of the Financial Services Bill, the FSA can void any contracts that it believes will encourage overly risky strategies among bank employees from January 2010.

Mathew Rutter, a partner at law firm Beachcroft, described this new ability as ’the ultimate sanction’, which will allow the City regulator to strengthen its position in negotiations.

He told the Guardian: ’The power to tear up bankers’ service contracts sounds dramatic, but I doubt it is something the FSA would be keen to use.’

The bill also includes the creation of a new organisation known as the Financial Stability Council, which will consist of representatives from the FSA, the Treasury and the Bank of England.

Reacting to the Queen’s Speech, a spokesperson for the British Bankers’ Association expressed concern that certain elements of the banking reforms could ’put the industry at a serious disadvantage and discourage global banks from coming to the UK’.
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