Banks will only receive government guarantees to depositors for their retail operations. This will require all banks to fully separate their “normal banking” deposit operations from their riskier “investment banking” operations. Banks must submit their separation plans for approval by the Bank of England within 18 months, and those plans must result in full separation within 5 years of approval.
Banks, post-separation, will be required to maintain capital ratios of at least 8%, and be subject to direct and detailed supervision by the Bank of England. EU regulations limiting bonus payments will apply to these banking institutions.
Investment houses will not have a banking license, once separated from normal banks, and will be free to make investments as they see fit and to structure the compensation of their employees as they wish. They will not be allowed to use the word “bank” in their name.
All depositors should be senior to all other creditors in the event of a bank running into problems.
LIFE supports the adoption of the EU transaction tax, and international cooperation for expansion globally.
LIFE will initiate research to determine if it is possible to separate the trading of securities by the general public from the trading activities of speculative market participants. The increasing use of high frequency trading and naked stock trades on the primary exchanges jeopardises the stability and reliability of markets that are properly intended to promote the use of public wealth for investment in productive businesses.
LIFE supports the growth of local Credit Unions. Credit Unions can be in the front line of replacing the “pay day loan” businesses that abuse their customers and profit from inaccessible large retail banking.
We support the loosening of rules concerning common interest, and the connection of back-office services with the Post Office to enable wider and easier access to Credit Union accounts by customers.
To enable Credit Unions to be more active in their communities we will raise the maximum deposit to £100,000, and increase the maximum interest rate to 4% above the BoE Base rate.
The bank deposit guarantee (Financial Services Compensation Scheme (FSCS)) will be extended to include Credit Union personal deposit accounts, when the Credit Union is accredited and audited by the BoE.
We will move to make all mortgages “non-recourse loans”, meaning that the lender will only have the mortgaged property as surety, and in the event of default and repossession the borrower’s other assets will not be encumbered.
LIFE will also introduce “Right to Sell” legislation providing citizens with the senior rights to sell their property to their local Community.