The government has declared its legislative hand for the next session months ahead of the usual autumn Queen's Speech. Largely dismissed by commentators as a gimmick to cover up the electoral disasters swirling about its head, the programme has plenty of potential interest for the financial services sector.
Most eyes instantly alighted on the Banking Reform Bill which will attempt to clear up the huge regulatory confusion and scope for buck-passing that dominated the early weeks of the Northern Rock collapse. It will also, controversially, try to put into law the enhanced compensation arrangements for bank customers should another bank go under. These were racked up to 100% for deposits up to £35,000 last October to stop the run on Northern Rock but like most panic measures they are devoid of logic and consistency. There is no reason why bank deposits should be a special case for enhanced compensation: they are no more or less important to people than their pensions, life assurance and other forms of saving. If the banks want special arrangements, they should fund them themselves, something they have been reluctant to do, expecting the public purse to bail out commercial incompetence in their sector. Plenty of rows ahead on that one.
The insurance industry was predictably pleased about the pledge to follow up the recommendations of the Pitt review on the response to last year's serious flooding. Any backsliding on this would have attracted alot of criticism.
The Welfare reform Bill will also be worth keeping any eye on as the government has said this will extend medical assessments and the development of personalised return to work programmes which should give a further boost to the rehabilitation sector.
One of the biggest bust-ups, however, will probably be over something that wasn't mentioned by Gordon Brown: pleural plaques. Since the House of Lords ruled that pleural plaques cannot give rise to a compensation claim, the trade unions and claimant lawyers have been up in arms. Their arguments are very emotional and based on a cynical exploitation of people who have pleural plaques. They stoke up irrational fears about other asbestos related diseases and then try to claim for emotional distress. Expect them to target the Law Reform, Victims and Witnesses Bill for a trade union sponsored amendment to reverse the House of Lords' ruling. The industry needs to be on its guard.
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