![]() ![]() We work closely with international regulators to ensure we could manage the failure of a UK firm with operations overseas. The UK is a global financial centre, home to both UK and international banks. The way we work with them is documented in our Memorandum of Understanding. We work with the FSCS, particularly when we have concerns that a firm is at risk of failure and when firms fail, to ensure that those eligible depositors are protected (up to £85,000). The Financial Services Compensation Scheme (FSCS) protects eligible customers of authorised financial services firms that have failed. We have published a statement to explain how our resolution and supervision responsibilities are divided. ![]() The PRA is a part of the Bank of England. The PRA and FCA work to ensure firms are safe and sound, and fair to customers. We work closely with the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). Legislation to make a series of proposed enhancements to the UK’s statutory resolution regime for CCPs are currently being considered by the UK Parliament. The regime was implemented in 2014 through the Financial Services Act 2012. The approach to a CCP resolution differs to the approach to a firm resolution, reflecting CCPs’ specific characteristics. The UK also has a resolution regime for central counterparties (CCPs). When a credit union fails, eligible depositors are paid out by the Financial Services Compensation Scheme (FSCS) up to £85,000 per depositor per credit union. The resolution regime does not apply to credit unions. On this page we use ‘firms’ to cover all the above. The UK’s resolution regime applies to banks and building societies. We published the first resolvability assessment of the major UK banks on 10 June 2022. And the Bank, as UK resolution authority, also publishes its own resolvability assessment of each of the major UK banks. The largest UK banks must also publish information about their preparations for resolution. The RAF makes the UK’s resolution regime more transparent and better understood by setting out the outcomes we require banks to achieve in a resolution. We use the Resolvability Assessment Framework (RAF) to assess whether banks operating in the UK are prepared for resolution. Resolving a major bank will always be hard to execute but we work with banks to make sure they are prepared for resolution and we can carry out our resolution plans if they fail. Since 2009, we have used the resolution regime for two firm failures. It is consistent with international standards for resolution regimes. The UK regime has been improved and expanded so it remains fit for purpose. The UK established a framework for resolution (known as the ‘resolution regime’) in the Banking Act 2009. These banks were ‘too big to fail’.Īfter the financial crisis, the UK, like many other countries, took action so there would be better options if a large bank were to fail in future. If a large bank had failed then, it would have caused serious problems for many people, businesses and public services. Governments – including the UK’s – felt they had no choice but to bail the banks out. In 2008, banks in many countries were in financial distress. You can watch our video on what happens when a bank or building society fails and what we do. In these cases, shareholders and certain creditors take the losses. We would need to resolve those to protect the UK’s vital financial services and financial stability. ![]() In some specific situations, it can be more eg if a depositor has just sold a house.īut the largest or most complex firms could not go into insolvency. If a firm’s failure would otherwise result in losses for depositors, the FSCS will protect eligible depositors, up to £85,000. Our resolution regime operates alongside the depositor protection regime. Eligible depositors in failed firms would either receive compensation from the FSCS within seven days or have their accounts transferred to another firm. Most UK firms would be put into insolvency if they failed, because that wouldn’t disrupt the economy or financial system. What we do if a bank or building society fails
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