Former Treasury insiders have criticised Chancellor George Osborne’s plans to scrap the FSA and replace it with a new regulatory structure.
Speaking at a panel session held by Lansons Public Affairs & Regulatory Consulting last week, Liberal Democrat peer and former Treasury spokesman Lord Oakeshott said the Government is wrong to break up the FSA in favour of the Prudential Regulation Authority and the Financial Conduct Authority.
He said: “The Bank of England should not carry out macro and micro regulation. Companies do not have to go through a restructuring process when they face problems and nor should that be the case for the regulator. “The answer to the problem of financial regulation is not just to set up new institutions but also to go through continuous learning.”
Former Labour Treasury minister Kitty Ussher agreed that restructuring the regulator is the wrong move. She said: “The changes to the FSA made by the current Government were politically driven and are a mistake.”
Ussher added that the Treasury is failing to involve itself enough with regulation at a European level. She said: “Regulation is a huge problem for Europe but the Treasury is consistently uninterested in engaging with the issue. The problem is such that there may even be an argument, as is often mooted in the Government, to move the issue of European financial services regulation to the Department for Business, Innovation & Skills.”
Lansons head of public affairs Mark Adams, who has also served as private secretary to Prime Ministers John Major and Tony Blair, said: “The Government would be wise to pay attention to the views of such an esteemed and diverse panel, particularly with regard to their criticism of the abolition of the FSA.”