Kamall: Taxpayers and savers must be protected from failing banks
London MEP Syed Kamall has helped draft new EU legislation that will protect taxpayers across Europe from having to bail out failing banks.
At the same time, the UK will not have to change its already-updated insolvency rules for protecting taxpayers and savers.
The creation of a new class of debt, which must be serviced by money set aside by banks, is intended to reduce the need for governments to intervene when institutions encounter financial difficulties and provides extra protection for customer deposits.
Member States, including the UK, which have already amended their insolvency rules to meet the new global standards, will be able to retain their own systems following pressure by Conservative MEP Dr Kamall, who helped steer the report through the European Parliament as a shadow rapporteur. He also ensured protection for stocks issued prior to the introduction of the new rules.
He said: “One of the priorities after the financial crisis should have been to make sure that taxpayers are no longer called upon to bail out banks when they get into difficulties. These measures help re-balance insolvency laws to ensure banks take more responsibility.
“I am pleased that the EU has avoided needless duplication by agreeing to my call for countries like the UK, which have already taken action, to be free to continue operating their own systems. It also prevents us needlessly changing our rules before the UK leaves the EU.
“This legislation is only one step to show that we have learned the lessons from the last financial crisis. We still need to look at measures to ensure that bank directors take responsibility for failure and to reform accounting standards to prevent financial institutions from booking revenues up front while not making sufficient provision for losses on financial instruments.”