Liberal Democrats

F42: Rebanking the UK

This motion develops policy on promoting a more diverse banking system, including a focus on community banking and finance.
Existing policies on bank reform are set out in policy motion Strengthening the UK Economy (2013), policy paper 105, Sustainable Prosperity and Jobs (2012), policy motion Tougher Action on Banks and Bonuses (2011) and the 2010 general election manifesto Change That Works For You.


F42: Rebanking the UK

(Passed with Amendment 1)

Conference welcomes the progress made by the coalition to make the big banks safer and to increase competition between them, including measures to divide investment and domestic operations and to speed the switching of accounts.

Conference notes that:

a) The UK's competitors and trading partners have powerful and diverse local banking systems that support small-scale enterprise, which the UK still lacks.

b) Research shows that co-operative and savings banks reduce the drain of capital from urban centres and foster regional equality because of their ability to lend to SMEs.

c) The big banks no longer want to fulfil the role of lending to small business or manufacturing directly - and are less and less willing to provide them with banking services. 

d) Increasing competition between the big banks, as proposed by Ed Miliband, will not in itself increase the diversity of the UK banking system. 

Conference believes that the lack of this lending infrastructure puts our economy at a disadvantage, and makes our cities and regions too dependent on London.

Conference therefore calls for:

1. A duty on banking regulators to promote a diverse banking system in the UK, and a new market in alternative sources of finance for enterprise.

2. A new, diverse local banking system, including community banks and community development finance institutions (CDFIs), funded by the big banks - which will pay for the infrastructure to lend in places and sectors where they are unable to lend themselves, using their geographical lending data to calculate how much they pay each year. 

3. A £100m community finance loan facility via the British Business Bank, to be lent on at low cost by credit unions and CDFIs to SMEs, social enterprises and individual consumers denied access to mainstream credit and finance services. 

4. An off-the-peg basic regulatory and IT package to encourage new community banks, and a legal structure for co-operative banks, as there are in most European countries (the UK's Co-operative Bank was owned by a mutual but was not itself mutual).

5. A simple system of resolution to allow small banks to collapse safely if they take wrong decisions, as they have in the USA.

6. An urgent national variation to lending regulations so that SME lending need not cost banks more than other lending.

7. The government to continue to support peer-to-peer lending, crowdfunding and similar internet-based finance in ways which benefit lenders, borrowers and organisations in the sector. 

8. The government to allow local authorities and their pension funds to continue to exercise their own judgement over what they invest in, provided it accords with existing rules on prudent financial management, and in the case of pension funds, the objectives of the fund, and recognise the value of their knowledge of the local economy.

 

Applicability: Federal.

 

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