Darling is tipped to give the FSA more powers to maintain financial stability following criticisms that the Bank of England failed to adequately warn of the banking crisis. This responsibility currently rests with the BoE.
The legislation would give the FSA the ability to question a bank’s practices and order it to make changes if it appeared to be threatening the stability of the banking stability.
This will be seen as a blow to the Conservatives who are proposing to scale back the role of the FSA and give power to the BoE.
This week BoE governor Mervyn King complained that he had not been consulted on the content of the white paper.