EU proposals to introduce new safeguards for taxpayers against the failure of financial institutions have been welcomed by the British Bankers’ Association (BBA).

The European Commission has published the paper Technical Details of a Possible EU Framework for Bank Recovery and Resolution. The EU’s consultation on a possible EU framework for bank recovery and resolution is the third stage in the process of EU regulatory reform. The EU has already reformed the bank capital regime and its supervisory structures to make Europe’s financial services sector more resilient against financial crisis.

Now it is addressing the steps to be taken if these safeguards do not work – if a bank faces failure.

BBA chief executive Angela Knight said: “This paper does address prevention measures – principally how to identify problems in a bank at an early stage – but its main significance is that it would extend across the EU some of the protections already enjoyed by UK bank customers. It would put in place for the first time mechanisms to address the failure of cross-border institutions