Q&A: What do the reforms mean for me?

By Ian Pollock
Personal finance reporter, BBC News

The government wants to improve financial advice

Chancellor Alistair Darling has set out his plans to stop banks going wrong and to protect people if banking crises still occur.

The big idea is that the financial authorities - the Treasury, Bank of England and Financial Services Authority - should have a more robust arrangement for stopping banks taking unnecessary risks.

But there is more to Mr Darling's plans than just stricter oversight of bank lending and borrowing.

If the government's ideas come to fruition, what will be in them for customers queuing at a cash machine?

On the face of it, bank customers should eventually be reassured that there is less chance than there is now of a bank or banks going bust or needing to be bailed out.

In other words, we should all be able to sleep a bit easier in our beds, knowing that the authorities have jolly well got to nip problems in the bud if they spot them, or take action even if they just suspect problems may be building up.

So that's all right then?

Not quite. No one is infallible, so no absolute promises are being made that there will never be any more problems in the banking system. But being awake at all times, instead of apparently being asleep at the wheel, is the theme.

The government says it wants to protect savers - doesn't it do that already?

The government's practical policy is that no saver should lose any money in a failed bank or building society - even if the money in their accounts is more than the limit of £50,000 under the Financial Services Compensation Scheme (FSCS).

But the government still wants to beef up the FSCS. It is proposing that the financial services industry should contribute in advance to the FSCS rescue fund for distressed financial institutions, instead of passing the hat round once an institution goes bust.

"Pre-funding" as it is called will be aimed at covering part, but not all, of the costs of a future bail-out.

Why did the chancellor mention money advice?

Knowledge is power, as they say.

The government has been concerned for a long time that most people know very little about even the most basic aspects of saving, borrowing, investing or just making ends meet.

If they knew more, they might be better protected.

So from the Spring of next year it will launch a national money guidance service, to offer general but practical financial advice to the public.

A trial has already started in the North West and North East of England, which the government thinks is shaping up to be a success.

I see the chancellor may be keen on traffic lights?

Yes, but he is not talking about street furniture.

He has been attracted by the schemes in use to highlight the nutritional content of food and thinks something similar may be applicable for financial products on offer to the public.

The government is also worried about mortgages. The FSA already regulates the sale of ordinary home loans. But not top-up loans, buy-to-let mortgages, or mortgages that are then sold on to other financial companies.

So the FSA may get the power to regulate the sale of these mortgages as well.

What about limiting the ability of people to borrow excessive amounts to buy a home - such as 100% mortgages?

That issue will be considered in a separate consultation by the FSA this autumn on regulation of the sale of mortgages.

Limiting the size of mortgages is not part of the government's latest plans.

And the FSA is not that keen on such a plan either, regarding it as unnecessary.

I see the government is not happy about all the complaints there have been about the financial services industry?

It notes that the Financial Ombudsman Service (FOS) is having to handle more complaints every year where people are not satisfied with the answer from a financial organisation.

Many of these have stemmed from issues affecting large numbers of people, such as the mis-selling of endowment polices, or the application of bank overdraft charges.

So it wants the the FSA, FOS or OFT to take quicker action to root out problems where lots of people are affected by the same issue.

And the government wants the bank charges saga brought to an end?

It is clearly not happy that nearly a million people have had their claims for the refund of bank charges suspended for two years while the issue gets thrashed out in a very long drawn out test case in the High Court.

So it is suggesting that there should be some sort of alternative collective route for a large number of disgruntled consumers.

As for the bank charges issue, the government says it "calls on the regulators and the banks to explore whether there is a quicker way of resolving these cases that is preferable for customers to pursuing further litigation."