The Banking Act 2009 was passed in the aftermath of the collapse of Lehman Brothers. It contained provisions allowing for the establishment, by secondary legislation, of a bespoke insolvency regime for investment banks. This is known as the Special Administration Regime (SAR).
When the SAR was created, HM Treasury was required to hold an independent review within two years of it coming into force. Peter Bloxham was appointed to do this. On 23 April 2013, he produced an interim report on how well the SAR meets the aims set out for it in the legislation. In addition, Mr Bloxham was asked by HM Treasury to take a broader look at whether there was more that could or should be done not just in the legislation but also in the regulation and in market practice to improve the SAR.
Mr Bloxham has now published his final report on the SAR which sets out a number of recommendations. These recommendations cover a number of areas concerning the SAR, which include those that are intended to:
- facilitate transfers of client positions without the need for individual client consent at an early stage in the administration;
- make amendments to the bar date;
- make the rules in the FCA’s Client Assets sourcebook and the SAR work better together i.e. review and expand the SAR provisions associated with a client’s claims against the failed firm arising out of client money; and
- make further enhancements to the Financial Services Compensation Scheme.
Further consultation is anticipated once HM Treasury decides on which recommendations it would like to accept.
View Review of the investment bank special administration regulations 2011: by Peter Bloxham, 14 January 2014