Bank Resolution (Recapitalisation) Bill [Lords]: New Clause 3

Parliament voted on 24 April 2025 on New Clause 3 to the Bank Resolution (Recapitalisation) Bill, a Liberal Democrat amendment that would have barred the largest banks from accessing the Bill's new emergency recapitalisation mechanism unless the Chancellor explicitly authorised it through a statutory instrument. The amendment was defeated by 212 votes to 88, with the government opposing it. The Bill creates a new tool allowing the Bank of England to direct the Financial Services Compensation Scheme to fund the recapitalisation of a failing bank, with costs recovered through a levy on the wider banking sector. The Liberal Democrats argued that without their amendment, the mechanism could in principle be applied to large high street banks, passing the cost of a bailout onto other banks and ultimately consumers. Their amendment would have limited access to the mechanism to smaller banks by excluding institutions that hold end-state MREL (the minimum requirement for own funds and eligible liabilities, a reserve that large banks must maintain to absorb losses in a crisis). Labour MPs voted unanimously against the amendment, while Conservatives, Liberal Democrats, and smaller parties including Plaid Cymru, the Greens, and the Democratic Unionist Party voted for it. The Conservatives supported the principle of restricting the mechanism to smaller banks but opposed the Liberal Democrat's chosen method, a statutory instrument subject to the negative procedure, arguing it could create market uncertainty in a crisis. No Labour or Labour and Co-operative MPs voted in favour, and a large number of MPs across all parties had no vote recorded.