CFG comments on draft Banking Reform Bill
12th October 2012
In response to the Draft Financial Services (Banking Reform) Bill, which was published today, Jane Tully, CFG’s head of policy and public affairs commented:
“The draft banking reform bill will enhance stability and integrity in the banking system. While it’s promising that much-needed reform is being taken forward, we feel the Government has missed an opportunity to introduce a fairer level of protection for charities.
"Under the new reforms charities are likely to lose a higher proportion of their deposits if a bank were to fail. The changes could also result in many charities depositing in banks with lower returns, and investing in advice or training to manage the increased risk, further adding to their cost base in this pressurised environment. We outlined these concerns in our response to the Banking Reform White Paper consultation.
“Charities will therefore need to be aware of the changes, and ensure that they have the skills and capacity to effectively manage this increased banking risk.
“The Government has also reiterated the expectation that Financial Services Compensation Scheme (FSCS) protection will be extended to cover all depositors, including charities of all sizes, pending the EU Directive on deposit guarantee schemes, which is promising. However, the £85,000 limit will mean compensation will only go so far – for large charities it will be a drop in the ocean. Again, charities will need to make sure they understand the protection available to them and adjust their banking arrangements if necessary.”
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Notes to Editors:
1. CFG is the charity that champions best practice in finance management in the voluntary sector. Our training and development programmes enable finance managers to give the essential leadership on finance strategy and management that their charities need. With more than 1,800 members, managing over £21bn, we are uniquely placed to challenge regulation which threatens the effective use of charity funds. For more information, please see www.cfg.org.uk
2. For further information, please contact firstname.lastname@example.org or call 020 7250 8348.