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January 2016: The impact assessment has been updated to reflect the bill as introduced into the House of Commons.
This document summarises the comments made on the proposed changes to the governance of the Bank of England and the government’s response. An impact assessment and Memorandum of Understanding are published alongside this response document.
The impact assessment has been prepared for the purpose of providing information to Parliament for the passage of the Bank of England and Financial Services Bill. It does not provide a full assessment of the impact of the measures for the purposes of sections 21 to 27 of the Small Business, Enterprise and Employment Act 2015. Where a full impact assessment is required by legislation, this will be published in due course.
The Financial Services Act 2012 requires the Treasury and Bank of England (‘the Bank’) maintain a Memorandum of Understanding on financial crisis management (‘the MoU’). The Bank of England Bill includes new requirements on the Bank to share information with the Treasury in relation to the management and impact of firm failure. Reflecting these changes, the government has published an updated draft of the MoU. This is subject to change following the passage of the bill.
The Financial Services Act 2012 fundamentally reformed the UK’s system of financial regulation, learning the lessons of the failed tripartite system and creating a set of new regulators with clear responsibilities and objectives. These reforms placed the Bank of England at the centre of the new system and granted it significant new powers and responsibilities.
The government and the Bank are committed to building on the success of these reforms and ensuring that the Bank is on the best possible footing to oversee its expanded remit. To this end, a new Bank of England Bill was announced alongside the Queen’s Speech, and the government has today published a technical consultation document setting out the reforms that will be brought forward.