FSA to become Bank of England subsidiary
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The FSA is to fall under the control of the Bank of England with a separate Consumer Protection Agency set up to regulate IFAs.
Chancellor George Osborne is set to reveal the restructure in his first Mansion House speech this Wednesday, according to a blog from the BBC’s business editor Robert Peston.
Peston says the Chancellor is also set to announce the separation of the FSA’s consumer protection activities into a new body called the Consumer Protection Agency, as proposed by the Conservative Party before the election. Enforcement activities are also set to be hived off to create a new Economic Crime Agency. The CPA would oversee regulation of IFAs.
The reform will mean that the part of the FSA that monitors banks, insurers and other financial institutions will become part of the Bank of England, though the regulator is expected to retain its own board.
The Bank of England will also set up a new Financial Policy Committee made up of executives from the Bank of England and senior representatives from the FSA.
The committee will be responsible for maintaining financial stability, and will use macro-prudential tools to prevent banks from offering credit when the economy overheats.
It had been thought that the FSA’s regulatory role would be retained following the coalition Government’s Programme for government document, which made no mention of plans for the FSA.
Despite the Conservatives long-held ambition to dismantle the FSA and hand power back to the Bank of England, the coalition’s Programme for government only referred to plans to “give the Bank of England control of macro-prudential regulation and oversight of micro-prudential regulation.” This was widely interpreted to mean that the FSA would be preserved.
Handing control back to the Bank of England would see a reversal of Gordon Brown’s decision in 1997 to take banking supervision from the Bank of England and merge it with other City regulatory bodies to set up the FSA.
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Readers' comments (29)
John Lacy | 14 Jun 2010 9:08 am
Now at last we may get some sort of control over this profligate bunch of muppets
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Mr Smug | 14 Jun 2010 9:13 am
Here we go again...
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Simon Kershaw | 14 Jun 2010 9:18 am
Why do I have a sense of foreboding about this vague set of intents?
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Anonymous | 14 Jun 2010 9:19 am
Although this looks like it could be good for small firms, unless there are wholesale changes in staff and recruitment standards it won't change anything apart from their name.
I really hope this opportunity is taken to get rid of the overpaid incompetent bureaucrats and that all staff have to apply for a job using proper external recruitment process, unlikely though.
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Anonymous | 14 Jun 2010 9:26 am
So now the banks can Regulate themselves.
End of career for a lot of ur methinks
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Same old, same old | 14 Jun 2010 9:29 am
So we will end up with the same people in the same location doing the same things earning the same salaries under a different letterhead.
Its just that one of Mr Cameron's cronies will have earned a fortune re-designing the logo and reprinting the stationery.
So for all your hope ... no real change
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Anonymous | 14 Jun 2010 9:32 am
More expense as all IFAs will now be requiring new stationery then? Will the regulatory fees we have to pay this year be reduced to compensate or will all these costs be borne by IFAs again? It will be worth it though to see the back of the inefficiencies of the FSA!
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mel samuels | 14 Jun 2010 9:36 am
I thought we were trying to cut costs, the costs of this change, setting it up, drafting the legislation, policies, procedures etc etc, then the subsequent cost to us in the industry such as of changing biz cards, headed paper, website etc will be massive – not doubt all the whingers on here will moan about this, then they’ll start moaning about the new CPA organisation because the real beef with you people isn’t with the FSA it is with anyone who reigns you in from ripping people off.
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Richard Wilson | 14 Jun 2010 9:36 am
Sounds to me as though we will still have a regulatory regime for IFA's run by bankers.
I expect also that we as IFA's will have to pay for it in some form or another.
No real change there then.
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Anonymous | 14 Jun 2010 9:38 am
Isn't this just a complete volte face? Oh but the Tories are past masters at that. How much is this going to cost taxpayers, to achieve...what?
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