Liberal Democrat shadow chancellor Vince Cable says Alistair Darling should be firing FSA chairman Sir Callum McCarthy after the regulator’s “systematic failure” over Northern Rock rather than increasing his powers.
He says: “After the Treasury Select Committee report concluded that the FSA was guilty of ‘systematic failure’ over Northern Rock, it is baffling that the Chancellor now seems intent on giving it a bigger role, rather than the Bank of England.
“The Government should be firing the chair of the FSA, not giving this failed regulator more responsibility. Immediately after being reappointed as Governor, Mervyn King is being undermined because powers are being shifted elsewhere.”
Cable says Darling seems focused on how to treat the symptoms of banking failures rather than addressing the causes.
He says: “Improved depositor protection is welcome, but not all problems in the financial sector can be solved by regulation alone. Ministers must work to make the whole banking sector more competitive. By breaking down the barriers which stop new and innovative companies entering the banking market and by letting banks fail, we can drive down costs and improve business practices.”