The trade body is responding to the joint HM Treasury, FSA and Bank of England consultation paper on financial stability and depositor protection and says that such a regime would build upon the strengths of the existing Financial Services Compensation Scheme and the banking industry would have a responsibility to explain to customers.
The IMA has also stressed the need for banks and their audit committees to revalue their assets properly through a system of fair value accounting to ensure all the “bad news” is taken into account to allow confidence in those markets to be restored.
IMA director of wholesale Guy Sears says: ““We have heard much about the problems the current crisis is causing the banks but we would like to hear equally vocal support for an enlarged, and easy to understand, compensation scheme for their depositors. As it is, the UK’s asset managers appear to be a lone voice calling for depositors’ interests to be put first. A rise in protection to £50,000 is not beyond the capacity of the banks and would provide significant underpinning for consumer confidence in the financial system.
IMA also supports new powers to deal with failing banks. We want to know that FSA has a range of tools and the will to use them – the consequences of this may be unpalatable for an individual bank and its shareholders but the market as a whole will benefit.
The current crisis is not one of liquidity, it is of confidence. In their consultation, the Government is proposing measures to address the crisis and we shall continue to actively support them.”