Chancellor gets new powers over banks
So when will we finally see some action?
In a crisisThe announcement comes as the Financial Services Bill is published in Parliament. As part of the process, the Treasury and the Bank of England have written a 'memorandum of understanding; which lays out how the various authorities will respond in the event of another financial crisis.
The new regime will ensure that the Chancellor is ultimately in control when tax-payers' money is at risk. The lack of power to take control suddenly dawned on the government in the midst of the last crisis, when Alistair Darling realised he was powerless to order Northern Rock to do anything to protect those who held money in the institution.
New powersIn a time of crisis, the regulator will also have the power to take over a lender who has run into difficulties, wipe out all the demands of shareholders and protect the integrity of the bank by force.
The bill will also move the banking regulatory responsibilities of the Financial Services Authority over to the Prudential Regulatory Authority of the Bank of England - which will be in charge of day-to-day regulation of the sector. There is every chance that this Authority will be subject to some sort of oversight, given that it will be so much more powerful than before.
As yet, we are unsure whether there will be additional measures to stop banks from paying large bonuses and dividends if their priority should be building their capital assets to make the bank more financially robust.
Consumer protectionThe consumer protection bits of the FSA will be transferred over to a new Financial Conduct Authority. This is expected to be given some more powers as well including the right to ban products it does not believe are in the best interests of customers - even before a single complaint is made.
This isn't a first step for the bill. It has been in the making for years now, and been the subject of a whole series of consultations. However, there are still some steps to go before it becomes law (possibly later this year).
Before we get to this stage it's going to have to make it through the House of Commons and the House of Lords, and at the moment there is no absolute guarantee that this process is going to be a smooth one.