Financial service reform likely as two measures dumped

Published on Thursday 8 April 2010 22:55

NEW laws to reform and strengthen the financial services industry look set to become law after two key planks were removed by the government.

MPs yesterday accepted changes made in the Lords to the Financial Services Bill, withdrawing plans to set up a statutory high-powered committee aimed at improving financial stability.

Proposals to allow "class actions" against financial firms were also removed as part of the parliamentary "wash-up" process so that other measures in the legislation could be passed into law.

Consumers' group Which? said the next government should revive the rights to collective redress as soon as possible.

Lord Myners, the City minister, said the idea was still "necessary, sensible and desirable".

Another aspect stripped out was the proposal for compulsory financial education in schools.

Economic Secretary Ian Pearson said the government still believed "very strongly" that a Council for Financial Stability (CFS) – which would have brought together the Bank of England, Treasury and Financial Services Authority, and is already operating in shadow form – was still "an important and necessary addition to financial regulation in this country".

But shadow Treasury minister Mark Hoban described the CFS as a "cosmetic" reform and said scrapping it would allow for a "fresh start" after the election.

The changes were approved without a vote and the bill now goes forward for Royal assent.