A RANGE of measures to strengthen regulation of the crisis-hit UK banking sector was outlined in the Queen’s Speech.

The Banking Bill set out plans for the Bank of England and the Financial Services Authority to have greater powers to step in early to help failing banks, while confirming greater protection for depositors.

And a voluntary code of conduct requiring banks to give customers notice if they plan to withdraw or alter credit facilities will be made mandatory, the Government said, but this is not part of the Banking Bill.

Banks that do not could be forced to pay hefty fines imposed by the FSA, which is due to be appointed to police the expected new statutory set of rules.

Fears have been growing over the consequences of the lending clampdown among banks, with the Bank of England Governor Mervyn King last week warning that it posed the biggest single threat to the UK economy.

He said it was vital to have proper supervision of the banks to ensure they start lending again to consumers and businesses.

The statement on the Banking Bill said it would “strengthen the framework for protecting bank depositors and enhance financial stability”.

The Queen said: “The strength of the financial sector is vital to the future vibrancy of the economy.

“Therefore, legislation will continue to be taken forward to ensure fairer and more secure protection for bank depositors and to improve the resilience of the financial sector.”