5.6 The legal environment

Question 1

Acts of Parliament that have entered into law since the financial crisis:

Answer 1

• The Banking Act 2009
• The Financial Services Act 2010
• The Financial Services Act 2012
• The Financial Services (Banking Reform) Act 2013
• Finance Act 2016

Question 2

What does the Banking Act 2009 provide?

Answer 2

A set of tools to allow the regulatory authorities to resolve a distressed bank or building society in an orderly way

Question 3

How did the Banking Act 2009 increase responsibilities, power and role of the BoE?

Answer 3

By creating a Special Resolution Regime

Question 4

Example of the BoE using the powers given to it under the Banking Act 2009:

Answer 4

The BoE transferred the social housing lending business from the failed Dunfermline Building Society to the Nationwide Building Society

Question 5

What does the Financial Services Act 2010 include?

Answer 5

• Provisions that require a bank to have a recovery and resolution plan in case it gets into trouble.
• Outlines of consumer protection measures and defines liability of the FSCS in the event of a bank failure

Question 6

What acts did the Financial Services Act 2012 amend?

Answer 6

• Bank of England Act 1998
• Financial Services and Markets Act 2000
• Banking Act 2009

Question 7

What are the provisions under the Financial Services Act 2012?

Answer 7

• Gave the BoE responsibility for protecting financial stability
• Abolished the FSA and created the FPC, PRA and the FCA
• Laid down regulations about the Libor

Question 8

What does the Financial Services (Banking Reform) Act 2013 do?

Answer 8

• Provides for the ring-fencing of retail banking activities

- Introduces preference for the deposits protected by the FSCS in the event of a bank’s insolvency

Question 9

What did the Finance Act 2016 introduce changes to?

Answer 9

• Income tax
• Personal and savings allowances
• Pension tax rules
• Rates of corporation tax
• Capital gains tax
• Inheritance tax

Question 10

What does change to the serious ill-health pension lump sum mean?

Answer 10

A person who discovers they have a terminal illness can withdraw their lump-sum pension more flexibly

Question 11

What did the Finance Act 2016 introduce?

Answer 11

• Change in how benefits are accounted for
• Reform of the ‘wear and tear’ allowance
• Introduction of the apprenticeship levy

Question 12

What is the aim of the apprenticeship levy?

Answer 12

To fund millions of new apprenticeships by taxing employers a certain amount of their pay bill, some of which can be offset to hire apprentices