Banking Reform

The parties agree that reform to the banking system is essential to avoid a repeat of Labour’s financial crisis, to promote a competitive economy, to sustain the recovery and to protect and sustain jobs.

We agree that a banking levy will be introduced. We will seek a detailed agreement on implementation.

We agree to bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector; in developing these proposals, we will ensure they are effective in reducing risk.

We agree to bring forward detailed proposals to foster diversity, promote mutuals and create a more competitive banking industry.

We agree that ensuring the flow of credit to viable SMEs is essential for supporting growth and should be a core priority for a new government, and we will work together to develop effective proposals to do so. This will include consideration of both a major loan guarantee scheme and the use of net lending targets for the nationalised banks.

The parties wish to reduce systemic risk in the banking system and will establish an independent commission to investigate the complex issue of separating retail and investment banking in a sustainable way; while recognising that this would take time to get right, the commission will be given an initial time frame of one year to report.

The parties agree that the regulatory system needs reform to avoid a repeat of Labour’s financial crisis. We agree to bring forward proposals to give the Bank of England control of macro-prudential regulation and oversight of micro-prudential regulation.

The parties also agree to rule out joining the European Single Currency during the duration of this agreement.


Immediately related elementsHow this works
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Conservative - Liberal Democrat Coalition Agreement »Conservative - Liberal Democrat Coalition Agreement
Banking Reform
A banking levy will be introduced »A banking levy will be introduced
Ensure the flow of credit to viable SMEs »Ensure the flow of credit to viable SMEs
Foster diversity, promote mutuals for a competitive banking industry »Foster diversity, promote mutuals for a competitive banking industry
Independent commission on separating retail and investment banking »Independent commission on separating retail and investment banking
Reform to the banking system is essential »Reform to the banking system is essential
Regulatory system needs reform »Regulatory system needs reform
Rule out joining the European Single Currency during agreement »Rule out joining the European Single Currency during agreement
Tackle unacceptable bonuses in the financial services sector »Tackle unacceptable bonuses in the financial services sector
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