Financial services has endured another 12 months of blistering regulatory reform and been mired in its fair share of political scuffles. As parliament goes into recess and Lords and MPs go on holiday it is a good time to reflect on the year.
Following the Libor rigging scandal, the parliamentary commission on banking standards made sweeping recommendations to change banking culture, including an overhaul of the approved persons regime.
The banking reform bill is moving through parliament with proposals to ring-fence retail and investment banks.
Meanwhile, the Financial Services Act 2012 in April saw the FSA abolished and the creation of the Prudential Regulation Authority and the Financial Conduct Authority.
The financial services bill saw battles over the long-stop for financial advisers, payday lending and early warning notices.
Pensions have also been in the spotlight with charges, tax relief, auto-enrolment for small firms and shopping around for annuities.
Here we set out the 10 areas of focus over the last year in politics and financial services:
1. Payday lenders
Payday lenders have come under severe pressure in the last 12 months. Last year Labour forced the Government to regulate the sector under the Financial Services Act 2012 from April 2014.
Archbishop of Canterbury Justin Welby, who led the charge in the House of Lords, says he wants to compete Wonga and other short-term lenders “out of existence” by boosting the credit unions’ share of the market.
2. Leverage ratio
Sir John Vickers’ Independent Commission on Banking recommended a 4.06 per cent leverage ratio for banks but was rejected by the Government, which opted for Basel III agreement of 3 per cent, in June 2012.
The last year has seen renewed pressure from Labour and the parliamentary commission on banking standards to increase the rate.
It has been met with fierce resistance from banks and building societies with Nationwide arguing it would lead to drastic cuts in mortgage lending.
The PRA has called for banks to meet the 3 per cent level by next year triggering a £1.8bn capital shortfall at Nationwide and a £12.8bn capital shortfall at Barclays. Barclays has sought to plug the hole in its balance sheet through a £5.8bn rights issue.
3. Co-operative Bank
The Co-operative Bank hit trouble and was forced to plug a £1.5bn capital shortfall by turning to bondholders.
4. Help to Buy
In the March Budget, Chancellor George Osborne unveiled his big bazooka to boost the housing market with two ambitious schemes under Help to Buy.
After years of tinkering he launched a new-build scheme in April with a general guarantee scheme commencing next January to help borrowers with a 5 per cent deposit.
Debate has focused on whether the second instalment will create a housing bubble with warnings from the Treasury select committee, ex-Bank of England governor Lord Mervyn King and the International Monetary fund.
5. Pension charges
Pensions minister Steve Webb accused him of “scaremongering” but then unveiled plans to introduce a charges cap later this year.
6. Pensions tax relief
In the autumn statement pensions tax relief was cut again from a £50,000 to £40,000 annual limit, with the lifetime allowance cut from £1.5m to a £1.25m.
Treasury chief secretary Danny Alexander ruled out further changes but the Treasury has since opened a public debate on the topic.
A Pensions Policy Institute report outlined a range of options for reform with the Trade Unions Congress backing a flat rate of 30 per cent.
The FortyGroup of Conservative MPs called for higher rate tax relief to be scrapped along with the tax-free lump sum.
7. Money Advice Service
Early last year the Treasury select committee launched a sub-committee inquiry into the Money Advice Service.
A series of bruising hearings in the last year has seen new faces Treasury economic secretary Sajid Javid and MAS chief executive Caroline Rookes quizzed on planned changes.
MPs have questioned whether MAS should exist, and hit out at its marketing budget and “meaningless” business plan.
8. Early warning notices
The Government introduced a power for the FCA to publish notices that it is investigating firms or individuals for enforcement action before the case has concluded.
After a battle in the House of Lords, the Government agreed concessions which saw the Treasury retain a reserve power to withdraw the FCA’s ability to publish early warning notices if the regulator is found to be damaging UK interests through its use.
9. Interest rate swap misselling
Banks have set aside more than £4bn to deal with interest rate swap misselling.
MPs have raised concerns about companies going bust before being able to claim compensation, and that small firms with misselling complaints have to pursue these through the courts rather than the Financial Ombudsman Service.
Banks are continuing to review past sales and set money aside as the size of the scandal grows.
Barclays kicked off the whole sorry saga of Libor rigging last July with £290m worth of global fines resulting in the resignations of its chairman Marcus Agius and chief executive Bob Diamond.
Since then Royal Bank of Scotland has been fined £390m and UBS was fined £940m.
An RBS trader memorably said he was like a “whore’s drawers” in conversations related to manipulating the rate.
The Wheatley Review into Libor was fully implemented into law as part of the Financial Services Act. The British Bankers Association was stripped of its role as Libor administrator with the contract passing to the New York Stock Exchange last month.