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Detail of outcome
This document details the summary of responses to the consultation on the special administration regime for payment and settlement systems that was published in April 2013.
On Thursday 25 April, the government published a consultation on a special administration regime for payment and settlement systems.
Payment and settlement systems are integral to the efficient operation of the financial system, processing transactions worth hundreds of billions of pounds a day. Any interruption of their services would likely cause severe disruption to the wider financial sector and the real economy.
As things stand, in the unlikely event that the operator of a systemically important payment or settlement system were to become insolvent (i.e. unable to repay its debts) it would likely go into a normal administration procedure. Here the firm would be managed in the interest of its creditors, without concern for implications for the wider economy. Under these circumstances, crucial payment and settlement services could be threatened.
The government proposes that a “special” administration regime should be in place for systemically important payment and settlement systems, under which the overarching objective of the administration would be to maintain the firm’s critical services. This would ensure that even in insolvency the firm would continue to provide the required infrastructure, until the firm recovers or an alternative source of provision is available.
This is the latest step in the government’s work to ensure that the failure of a single financial institution is not allowed to put UK financial stability at risk.