Among other things, the act (1) revised the minimum criteria for authorizing a bank; (2) established an advisory board, the Board of Banking Supervision, to advise the Bank on its actions; (3) amended the grounds on which the Bank might or was required to revoke authorization; (4) gave the Bank the power to restrict an authorization and set up an appeals process; (5) required banks to report their large exposures to the Bank; and (6) enhanced the Bank’s authority to obtain information from a bank. Banks audited by smaller accounting firms tend to be the smaller banks in the United Kingdom. The Bank of England Authorizes, Regulates, and Supervises Banks

Since the passage of the 1979 Act, the Bank has been formally recognized in statute as the primary regulator and sole supervisor of authorized banks in the United Kingdom. This kind of interpretation is viewed as binding on the bank. The Bank’s policy is to require full-scope records and controls reviews on an annual basis for “small or vulnerable” banks. In addition to its role in bank regulatory and supervisory matters, the Bank has responsibilities in other bank-related activities such as liquidity provision, crisis management, payments clearance, international negotiations, and lender of last resort. The Deposit Protection Board administers the deposit protection system and controls the Fund that pays out claims. The Fund receives no direct financial backing from the Bank or the U.K. taxpayer.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the structure and operations of the Bank of England, the United Kingdom's banking regulatory agency.

What GAO Found

GAO found that: (1) the Bank is recognized as the primary regulator and sole supervisor of authorized banks in the United Kingdom; (2) the Bank's primary purpose is to protect the interests of depositors; (3) the Bank has the authority to examine and request information from banks and to require accounting firms to produce reports on bank records and controls; (4) full-scope, on-site bank examinations are carried out by an 11-member bank review team; (5) the Board of Banking Supervision is an independent committee that advises the Bank on its actions and is generally viewed as a valuable component of banking supervision; (6) the Board's involvement in the Bank's supervisory activities has recently been strengthened; (7) the Bank has responsibilities in other bank-related activities, such as liquidity provision, crisis management, payments settlement, international negotiations, and lender of last resort; and (8) the Bank provides staff to the deposit protection system, although the Deposit Protection Fund is privately funded through levies on authorized banks with no direct financial backing from the Bank or U.K. taxpayers.