Financial Services (Banking Reform) Bill

Page 21, line 15, at end insert—

“( )   In section 391 of FSMA 2000 (publication), in subsection (1ZB), after
paragraph (i) insert—

“(ia)   section 142N;”.”

Insert the following new Clause—

“Competition and diversity

The Secretary of State must bring before Parliament within 6 months of the
passing of this Act proposals to increase competition and diversity in
banking by imposing upon the Royal Bank of Scotland Group a duty to
apply the following principles—

(a)   the principle of regionality whereby each branch of the bank is
permitted to take on new deposits, open new accounts and make
loans to companies or individuals only when the registered
addresses of these companies or individuals is within the defined
geographical area of operation of that branch;

(b)   the network principle whereby regional groups of local branches
are autonomous in terms of governance, publish separate reports
and accounts, collaborate with other branches to share central
services such as the provision of systems, marketing, specialist
financial products, liquidity management and wholesale funding
while also maintaining appropriate mutual guarantees and self-
regulation within the group to ensure that failing local
management and branches are dealt with within the group with no
recourse to the taxpayer;

(c)   the stakeholder principle whereby the governance of regional
groupings of local branches explicitly includes stakeholder
representation, comprising local businesses, customers, suppliers
and employer and elected employee representatives;

(d)   the social purpose principle whereby a broader social purpose is
embodied either in the banking licence of the Royal Bank of
Scotland Group or other statute so that the directors do not have a
duty to maximise profit, but to ensure the profitability and
financially sustainability of their local operations in supporting the
economy of their regions of operations and financial inclusion in
those regions, and nothing in this social purpose principle requires
making loans that could not reasonably be expected to be repaid.”