Osborne: Bank Reforms Will Protect Taxpayer
The Bank of England is to be given new powers to "call time" on reckless banks under sweeping reforms to protect taxpayers from another financial meltdown.
Announcing changes to the regulatory system in April, George Osborne said the new watchdog would be the "super cop" for the industry to keep banks safe and protect the economy.
The Chancellor said people were still reeling from the 2007 financial crisis that forced the country to bail out major banks with tens of billions of pounds of taxpayers' money.
He said: "Irresponsible behaviour was rewarded, failure was bailed out, and the innocent - people who have nothing whatsoever to do with the banks - suffered.
"Let's take the anger we feel about the banks and turn it into change to build the banking system that works for us all."
A new competition regime will take effect in September to make it easier for customers to switch accounts, the Chancellor said.
Customers will be able to transfer their funds to a rival provider within a week under the reforms.
Mr Osborne also introduced new legislation which will for the first time force banks to split up their so-called risky "casino-style" investment arms from their retail operations to protect savers' deposits, keep branches going and cash machines operating.
Banks were warned they faced "full separation" and would be broken up if they refused to accept the changes and flouted the new rules under the Banking Reform Bill.
Speaking at JP Morgan's administration offices in Bournemouth, Mr Osborne hailed 2013 as "the year we re-set our banking system".
"No more rewards for failure. No more too big to fail. No more taxpayers forking out for the mistakes of others," he said.
"The same rules for the banking business as any other business in a free market. So the banks work for their customers and not the other way round.
"So when mistakes are made, it's the banks and not the taxpayer that picks up the bill."
At present, 75% of all personal current accounts are in the hands of just four companies.
Paul Lynam, chief executive of the Secure Trust Bank, said the action to increase competition was a step in the right direction, but did not strike at "the heart of the issue".
He told Sky News: "What we need is a situation where the host of banks, the vast majority of which are not systemically risky and are already in the ring-fenced form, can compete on a like-for-like basis with the large incumbents."