In a speech to the British Bankers’ Association tonight, Mandelson will say that he does not support a “twin-peaks” system and says a stronger regulator is needed rather than a weaker one and therefore the responsibility for financial regulation will remain with the FSA.
He will say: “We need to keep prudential and conduct of business expertise in one place, in a regulator capable of seeing all parts of the picture at once. That regulator has to be the FSA.”
Mandelson’s comments come ahead of the Government’s White Paper on regulation which was originally due to be published on Wednesday but has now been pushed back to next week.
Last week, Bank of England governor Mervyn King hit out at Chancellor Alistair Darling saying he had not been consulted on the content of the White Paper.
There were reports last week that the Conservatives would give the Bank of England powers to oversee UK banks rather than leaving them with the FSA.