On 17 July 2024, the Government published the King’s Speech 2024, which set out a list of proposed legislation including the Bank Resolution (Recapitalisation) Bill, the National Wealth Fund (NWF) Bill, the Pension Schemes Bill, and the Draft Audit Reform and Corporate Governance Bill.

Bank Resolution (Recapitalisation) Bill

This Bill is intended to enhance the UK’s resolution regime by providing the Bank of England (BoE) with a more flexible toolkit to respond to the failure of small banks. It introduces a new mechanism which would allow the BoE to use funds provided by the banking sector to cover certain costs associated with resolving a failing banking institution and achieving its sale in whole or in part.

In particular, the Bill is designed to respond more effectively to small bank failures where resolution is considered to be in the public interest, by:

  • Expanding the statutory function of the Financial Services Compensation Scheme (FSCS), so that it is required to provide funds to the BoE upon request, to be used where necessary to support the resolution of a failing bank.
  • Allowing the FSCS to recover the funds provided by charging levies on the banking sector (similar to the current arrangements for funding depositor pay-outs in insolvency). Credit unions will not be in scope of the levy.
  • Giving the BoE an express ability to require a bank in resolution to issue new shares, facilitating the use of FSCS funds to meet a failing bank’s recapitalisation costs.

The Government considers that together, these measures give the BoE a more flexible toolkit to respond to small bank failures in a way that promotes financial and economic stability and strengthens protections for public funds, whilst avoiding new upfront costs on the banking sector or additional costs for taxpayers.

National Wealth Fund Bill

The Government explains that the NWF would be central to its mission to deliver growth and a greener economy, and notes that it has already begun work to align the UK Infrastructure Bank and the British Business Bank under the NWF. It is introducing the NWF Bill to “ensure this institution is at the heart of the country’s mission to grow the economy and create wealth in every community”.

Under the NWF Bill:

  • The NWF would directly invest in the priority sectors set out in the Government’s manifesto, across the UK.
  • To ensure investments can start immediately, the NWF will deploy funding through the UK Infrastructure Bank.
  • By aligning critical institutions like the UK Infrastructure Bank and the British Business Bank, the NWF is intended to create a single coherent offer for businesses and a compelling proposition for investors, deploying public capital to unlock investment opportunities.

Pension Schemes Bill

The Pension Schemes Bill is intended to create a private pensions market that encourages consolidation and focuses on value and outcomes for members, which the Government says will not only enable security in retirement, but also enable pension schemes to invest in a wider range of assets, driving growth.

Measures set out in this Bill include:

  • Preventing people from losing track of their pension pots through the consolidation of Defined Contribution individual deferred small pension pots.
  • Ensuring all members are saving into pension schemes delivering value through the Value for Money framework. (The Financial Conduct Authority will ensure the framework is applied to contract schemes and therefore consistently across the whole pension market.)
  • Requiring pension schemes to offer retirement products so people have a pension and not just a savings pot when they stop work.
  • Consolidating the Defined Benefit (DB) market through commercial Superfunds.
  • Reaffirming the Pensions Ombudsman as a competent court.
  • Amending the Special Rules for End of Life (Pension Protection Fund and Financial Assistance Scheme).

Draft Audit Reform and Corporate Governance Bill

Under this draft Bill, the Government would replace the Financial Reporting Council with a new, ‘revamped’ regulator – the Audit, Reporting and Governance Authority – which would uphold standards and independent scrutiny of companies’ accounts, as well as accountability for company directors, and would have powers to require better transparency from large companies.

The new regulator would also form a platform for other changes including:

  • A wider remit, by extending Public Interest Entity (PIE) status to the largest private companies and thus making sure the audits of those important businesses are high quality and give early warning of financial problems.
  • Removing unnecessary rules on smaller PIEs, making life easier for important smaller businesses by cutting requirements that are disproportionate.
  • Introducing powers to investigate and sanction company directors for serious failures in relation to their financial reporting and audit responsibilities, so there are consequences for putting forward ‘dodgy’ accounts.
  • A regime to oversee the audit market, protect against conflicts of interest at audit firms, and build resilience so quality audit is available to all companies that need it.

Further information

For further information on the new Labour Government’s plans for financial services, please see its Financing Growth paper, published in February 2024.