When the introduction of the UK bank levy was announced in the 2010 budget it was also announced that there would be a review in 2013 to ensure that the levy was operating efficiently. On 4 July 2013 the UK published a consultation document on the levy, requesting comments by 26 September 2013. The bank levy was introduced to encourage banks to deal with the systemic risk present in their activities and to reduce their participation in riskier activities. The amount of the levy was set with this in mind and is not to be changed as part of the review. The review is therefore to be cost neutral.
The review focuses on the operational and compliance aspects of the bank levy, considering the possibility of making savings in compliance costs. The review also examines whether the bank levy is applied in a fair manner, taking into account the difference between banks in size, location, legal structure and internal systems. The review considers the possibility of adjusting the detail of the levy so that it can target the riskier functions carried out by banks. This would have the consequence of changing the burden of the levy among the banks and would be an incentive for banks to reduce their riskier activities. Another reason for the review is to ensure that the levy continues to be aligned with the regulatory regime, taking into account any changes to that regime. The concept of bank revenue for the purposes of the levy is also being reviewed.
