Chancellor Alistair Darling agreed in March to give the FSA the extra powers, similar to those used in the US, but FSA chairman Sir Callum McCarthy told the Treasury select committee last week this had “not yet happened”.
Chief executive Hector Sants said the regulator was disappointed that a timetable had not been set. He said: “Given the importance that we attach to this issue, this is disappointing.”
TSC chairman John McFall said he understood there was a seizure in getting the legislation implemented. He said he would write to the Chancellor asking for details.
McCarthy insisted that the FSA is determined to make more prosecutions for insider dealing. He said the FSA had more than doubled the number of staff in this area from 12 to 30 and improved technology but said the additional powers are “essential” if it is to make the step-change it believes is “very necessary”.
The decision to give the regulator new powers was made after rumours about HBOS’s funding saw its share price drop dramatically earlier this year.
Director of enforcement Margaret Cole told the TSC the FSA planned to concentrate on criminal cases rather than civil. She said: “Criminal cases act as a significantly greater deterrent.”
Sants said he wanted to “remove the misconception” that the FSA was a light touch.
McCarthy told the TSC he was “very confident” that smaller building societies would benefit indirectly from the Bank of England’s 50bn liquidity injection through “a transition mechanism”.
Sants said the FSA had improved its IT system which would now allow Bank of England staff to have the same access to data as those working for the regulator. He said: “It would become, in virtual terms, one department.”